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H.rep. 112 421 H.rep. 112 421 Document Transcript

  • 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 R E P O R T OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 112 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERN- MENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPRO- PRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 together with MINORITY VIEWS MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printedtjames on DSK6SPTVN1PROD with REPORTS seneagle VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00001 Fmt 6012 Sfmt 6012 E:HROCHR421.XXX HR421
  • CONCURRENT RESOLUTION ON THE BUDGET—FISCAL YEAR 2013tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00002 Fmt 6019 Sfmt 6019 E:HROCHR421.XXX HR421
  • 1 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 R E P O R T OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 112 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERN- MENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPRO- PRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 together with MINORITY VIEWS MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printedtjames on DSK6SPTVN1PROD with REPORTS U.S. GOVERNMENT PRINTING OFFICE 73–320 WASHINGTON : 2012 seneagle VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00003 Fmt 4012 Sfmt 4012 E:HROCHR421.XXX HR421
  • COMMITTEE ON THE BUDGET PAUL RYAN, Wisconsin, Chairman SCOTT GARRETT, New Jersey CHRIS VAN HOLLEN, Maryland, MICHAEL K. SIMPSON, Idaho Ranking Minority Member JOHN CAMPBELL, California ALLYSON Y. SCHWARTZ, Pennsylvania KEN CALVERT, California MARCY KAPTUR, Ohio W. TODD AKIN, Missouri LLOYD DOGGETT, Texas TOM COLE, Oklahoma EARL BLUMENAUER, Oregon TOM PRICE, Georgia BETTY MCCOLLUM, Minnesota TOM MCCLINTOCK, California JOHN A. YARMUTH, Kentucky JASON CHAFFETZ, Utah BILL PASCRELL, JR., New Jersey MARLIN A. STUTZMAN, Indiana MICHAEL M. HONDA, California JAMES LANKFORD, Oklahoma TIM RYAN, Ohio DIANE BLACK, Tennessee DEBBIE WASSERMAN SCHULTZ, Florida REID J. RIBBLE, Wisconsin GWEN MOORE, Wisconsin BILL FLORES, Texas KATHY CASTOR, Florida MICK MULVANEY, South Carolina HEATH SHULER, North Carolina TIM HUELSKAMP, Kansas KAREN BASS, California TODD C. YOUNG, Indiana SUZANNE BONAMICI, Oregon JUSTIN AMASH, Michigan TODD ROKITA, Indiana FRANK C. GUINTA, New Hampshire ROB WOODALL, Georgia PROFESSIONAL STAFF AUSTIN SMYTHE, Staff Director THOMAS S. KAHN, Minority Staff Directortjames on DSK6SPTVN1PROD with REPORTS (II) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  • CONTENTS Page Statement of Congressional Authority Under the Constitution and the Law .... 3 Introduction: A Blueprint for American Renewal .................................................. 5 Summary Tables—Spending and Revenues: Table 1. Fiscal Year 2013 Budget Resolution ................................................ 12 Table 2. Fiscal Year 2013 Budget Resolution Discretionary Spending ........ 15 Table 3. Fiscal Year 2013 Budget Resolution Mandatory Spending ............ 17 Table 4. Summary of Fiscal Year 2013 Budget Resolution ........................... 20 Table 5. Fiscal Year 2013 Budget Resolution vs. the President’s Budget ... 21 Economic Assumptions of the Budget Resolution ................................................. 23 Table 6. Economic Projections: Administration, CBO, and Private Fore- casters ............................................................................................................ 25 Table 7. Economic Assumptions of the Fiscal Year 2013 Budget Resolu- tion ................................................................................................................. 27 Table 8. Tax Expenditure Estimates by Budget Function, Fiscal Years 2011–2015 ...................................................................................................... 28 Function-by-Function Presentation ........................................................................ 47 050 National Defense ....................................................................................... 49 150 International Relations ............................................................................. 53 250 General Science, Space, and Technology ................................................. 57 270 Energy ........................................................................................................ 59 300 Natural Resources and Environment ...................................................... 63 350 Agriculture ................................................................................................. 67 370 Commerce and Housing Credit ................................................................ 69 400 Transportation ........................................................................................... 77 450 Community and Regional Development .................................................. 81 500 Education, Training, Employment, and Social Services ........................ 85 550 Health ......................................................................................................... 91 570 Medicare ..................................................................................................... 95 600 Income Security ......................................................................................... 99 650 Social Security ........................................................................................... 103 700 Veterans Benefits and Services ................................................................ 107 750 Administration of Justice ......................................................................... 109 800 General Government ................................................................................. 111 900 Net Interest ............................................................................................... 113 920 Allowances ................................................................................................. 115 950 Undistributed Offsetting Receipts ........................................................... 119 970 Global War on Terrorism and Related Activities ................................... 121 Revenue .................................................................................................................... 123 Views and Estimates of the Committee on Ways and Means .............................. 127 Reprioritizing Sequester Savings ........................................................................... 131 Table 9. Reconciliation Savings by Authorizing Committee ......................... 135 The Long-Term Budget Outlook ............................................................................. 137 Table 10. Fiscal Year 2013 Budget Resolution vs. the CBO Alternative Fiscal Scenario .............................................................................................. 141 Section-by-Section Description ............................................................................... 143 Title I. Spending and Revenue Levels ............................................................ 143 Title II. Reconciliation ...................................................................................... 144 Title III. Recommended Levels for Fiscal Years 2030, 2040, and 2050 ....... 145 Title IV. Reserve Funds ................................................................................... 146 Title V. Budget Enforcement ........................................................................... 147 Title VI. Policy .................................................................................................. 151 Title VII. Sense of the House Provisions ........................................................ 153tjames on DSK6SPTVN1PROD with REPORTS (III) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  • IV Page The Congressional Budget Process ......................................................................... 155 Table 11. Allocation of Spending Authority to House Committee on Ap- propriations ................................................................................................... 158 Table 12. Resolution by Authorizing Committee (on-budget amounts) ....... 159 Enforcing Budgetary Levels .................................................................................... 163 Reconciliation ........................................................................................................... 165 Accounts Identified for Advance Appropriations ................................................... 167 Votes of the Committee ........................................................................................... 169 Other Matters To Be Discussed Under the Rules of the House .......................... 195 Minority Views ......................................................................................................... 196 The Concurrent Resolution on the Budget for Fiscal Year 2013 ......................... 201tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  • TABLES Page Table 1. Fiscal Year 2013 Budget Resolution ........................................................ 12 Table 2. Fiscal Year 2013 Budget Resolution Discretionary Spending ............... 15 Table 3. Fiscal Year 2013 Budget Resolution Mandatory Spending ................... 17 Table 4. Summary of Fiscal Year 2013 Budget Resolution .................................. 20 Table 5. Fiscal Year 2013 Budget Resolution vs. the President’s Budget .......... 21 Table 6. Economic Projections: Administration, CBO, and Private Forecasters 25 Table 7. Economic Assumptions of the Fiscal Year 2013 Budget Resolution ..... 27 Table 8. Tax Expenditure Estimates by Budget Function, Fiscal Years 2011– 2015 ....................................................................................................................... 28 Table 9. Reconciliation Savings by Authorizing Committee ................................ 135 Table 10. Fiscal Year 2013 Budget Resolution vs. the CBO Alternative Fiscal Scenario ................................................................................................................. 141 Table 11. Allocation of Spending Authority to House Committee on Appropria- tions ....................................................................................................................... 158 Table 12. Resolution by Authorizing Committee (on-budget amounts) ............... 159tjames on DSK6SPTVN1PROD with REPORTS (V) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00007 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
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  • 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. RYAN of Wisconsin, from the Committee on the Budget, submitted the following R E P O R T together with MINORITY VIEWS [To accompany H. Con. Res. 112]tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00009 Fmt 6659 Sfmt 6659 E:HROCHR421.XXX HR421
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  • Statement of Congressional Authority Under the Constitution and the Law Article I of the U.S. Constitution grants Congress the power to appropriate funds from the Treasury, pay the obligations of and raise revenue for the Federal Government, and publish statements and accounts of all financial transactions. In addition, the Congressional Budget and Impoundment Act of 1974 requires Congress to write a budget each year representing its plan to carry out these transactions in the forthcoming fiscal years. While the President is required to propose his administra- tion’s budget requests for Congress’s consideration, Congress alone is responsible for writing the laws that raise revenues, appropriate funds, and prioritize taxpayer dollars within an overall Federal budget. The budget resolution is the only legislative vehicle that views government comprehensively. It provides the framework for the consideration of other legislation. Ultimately, a budget is much more than series of numbers. It also serves as an expression of Congress’s principles, vision, and philosophy of governing. This budget, submitted to the U.S. House of Representatives for fiscal year 2013 and beyond, builds upon the budget that was writ- ten and passed by the new House majority last year. Like last year’s budget, it is offered on time, in accordance with the 1974 Budget Act, out of respect for the law and in order that the public be given a timely and transparent accounting of their government’s work. Like last year’s budget, it is committed to the timeless principles of American government enshrined in the U.S. Constitution—lib- erty, limited government, and equality under the rule of law. And like last year’s budget, it seeks to guide the Nation’s policies by those principles, freeing it from the crushing burden of debt now threatening its future. This budget is submitted, as prescribed by law, to clarify the challenges and the choices facing the American people, to provide a blueprint for the orderly execution of Congress’s constitutional duties, and to describe a path forward that renews the promise of this exceptional Nation.tjames on DSK6SPTVN1PROD with REPORTS (3) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00011 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • Introduction A Nation Challenged The challenges this Nation faces are among the largest in its his- tory. For years, bad policies advanced by both political parties have contributed to an irresponsible build-up of debt in the economy, and this debt now poses a fundamental challenge to the American way of life. This build-up of debt has manifested its effects in both the pri- vate and public sectors. In 2008, excessive leverage in the financial sector overwhelmed many banks, businesses and families. Irrespon- sible decisions in Washington and on Wall Street fueled a housing- price bubble that collapsed and turned mortgage-backed securities into ‘‘toxic assets.’’ It soon became clear that these assets, which were spread throughout the financial sector, posed a systemic risk to the economy. The resulting wave of panics, bankruptcies and foreclosures brought the global financial system to the brink of col- lapse. America is still living with the painful consequences of that crisis today. While some of the Federal Government’s emergency actionstjames on DSK6SPTVN1PROD with REPORTS (5) Insert offset folio 11 here 73320.001 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00013 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 6 in late 2008 helped to stem the immediate financial crisis, much of its intervention in the wake of the crisis simply aggravated the underlying problems. In most cases, policymakers sought to ad- dress the symptoms of the crisis by transferring private-sector debt to the public balance sheet. Since Election Day 2008, debt held by the public has increased by roughly $4.5 trillion—a 70 percent in- crease in a mere four years. This remedy didn’t just ignore the underlying cause of the prob- lem—it made the problem far worse. In Europe, the accumulation of public-sector debt now threatens to cause an even bigger calam- ity than the one caused by private-sector debt in 2008. The world’s new ‘‘toxic asset’’ is the sovereign debt of irresponsible European governments, infecting the balance sheets of major banks and threatening the stability of the global economy. And in the United States, government debt continues to rise at a frightening pace, raising fears that a similar crisis may happen here. The growing possibility of such a crisis is creating debilitating uncertainty about the future, hurting job creation and economic growth today. The economy has picked up in recent quarters, but overall growth and job creation remain sub-par, and unprecedented numbers of Americans have simply given up trying to find work. Real GDP grew by just 1.7 percent in 2011, and private-sector fore- casters are calling for growth of 2.3 percent in 2012—well below the 3.0 percent historical trend rate of U.S. growth and just a frac- tion of the growth pace observed in a typical recovery from reces- sion. Noted economists, including Federal Reserve Chairman Ben Bernanke, have argued that enacting a credible plan to deal with America’s long-term debt build-up would have a positive effect on growth and jobs immediately. Unfortunately, in the years following the meltdown, the Presi- dent and his party’s leaders failed to use their full control of Wash- ington to offer any plan to lift the debt and foster sustainable eco- nomic growth. Instead, the crisis was used as an excuse to enact unprecedented and counterproductive expansions of government power. A massive stimulus package failed to deliver promised re- ductions in unemployment. An unpopular health care takeover was jammed through Congress on a party-line vote. A short-sighted fi- nancial-regulatory overhaul failed to fix what was broken on Wall Street and made future bailouts more likely. And Federal policy- makers in thrall to a misguided form of environmental activism pushed through regulations and other policies that are making en- ergy more expensive in the midst of a weak economy. Through it all, the government’s fiscal position sharply deterio- rated. Total Federal debt has now surpassed the size of the entire U.S. economy. And the government’s non-partisan auditors have issued report after report warning of even larger debts to come, driven by health and retirement security programs that are being weakened by severe demographic and economic challenges. Instead of taking action, the administration punted the Nation’s fiscal problems to a bipartisan commission, whose recommenda- tions it proceeded to ignore in favor of proposals filled with gim- micks instead of real solutions. And the Democratic leaders of thetjames on DSK6SPTVN1PROD with REPORTS Senate have altogether abandoned their legal obligation to provide VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00014 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 7 a budget plan—it has been three years since the Senate passed a budget. A Choice of Two Futures Both parties share the blame for failing to take action over the years. But while Republicans offered a budget last year that would lift the crushing burden of debt and restore economic growth, the President and his party’s leaders are still refusing to take seriously the urgent need to advance credible solutions to the looming fiscal crisis. Instead, they are still offering little more than false attacks and failed leadership. Questioned about this disappointing reality at a recent House Budget Committee hearing, Treasury Secretary Timothy Geithner admitted, ‘‘We’re not coming before you to say we have a definitive solution to our long-term problem. What we do know is we don’t like yours.’’ 1 The President’s strategy seems to amount to this: Let somebody else propose a path forward, and then attack them for political gain. This budget offers a better path. The following report lays out the challenge—and the choice—that America faces in each key area of the budget. The common thread connecting them all is that a sharp and sudden debt crisis would threaten the entire American project: It would weaken national security, shred the safety net that vulnerable Americans rely on, break promises to seniors, im- pose massive tax increases on families, and leave all Americans with a diminished future. This looming crisis represents an enormous challenge, but it also represents a defining choice: whether to continue down the path of debt, doubt and decline, or put the Nation back on the path to pros- perity. It also represents a tremendous opportunity for this genera- tion of Americans to rise to the challenge, as previous generations have, and fulfill this Nation’s unique legacy of leaving future gen- erations with a freer, more prosperous America. A Blueprint for American Renewal This budget sets forth a model of government guided by the time- less principles of the American Idea: free enterprise and economic liberty; limited government and spending restraint; traditional family and community values; and a strong national defense. The Federal Government has strayed from these American prin- ciples. This budget offers a set of fundamental reforms to put the Nation back on the right track. The role of the Federal Government is both vital and limited. When government takes on too many tasks, it usually does not do any of them very well. Limited government also means effective government. This budget recommits the Federal Government to the security of every American citizen’s natural right to life, liberty and the pursuit of happiness, while fostering an environment for eco- nomic growth and private-sector job creation.tjames on DSK6SPTVN1PROD with REPORTS 1 Geithner, Timothy. ‘‘The President’s Fiscal Year 2013 Budget: Revenue and Economic Policy Proposals.’’ House Budget Committee hearing. February 16, 2012. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00015 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 8 1. Prioritize defense spending to keep America safe With American men and women in uniform currently engaged with a fierce enemy and dealing with emerging threats around the world, this budget takes several steps to ensure that national secu- rity remains government’s top priority. Providing for the common defense: This budget rejects proposals to make thoughtless, across-the-board cuts in funding for national defense. Instead, it provides $554 billion for national defense spending, an amount that is consistent with America’s military goals and strategies. This budget preserves necessary defense spending to protect vital national interests today and ensures fu- ture real growth in defense spending to modernize the armed forces for the challenges of tomorrow. Reprioritizing sequester savings to protect the Nation’s security: The defense budget is slated to be cut by $55 billion, or 10 percent, in January of 2013 through the sequester mechanism enacted as part of the Budget Control Act of 2011. This reduction would be on top of the $487 billion in cuts over ten years proposed in President Obama’s budget. This budget eliminates these additional cuts in the defense budget by replacing them with other spending reduc- tions. Spending restraint is critical, and defense spending needs to be executed with effectiveness and accountability. But government should take care to ensure that spending is prioritized according to the nation’s needs, not treated indiscriminately when it comes to making cuts. The nation has no higher priority than safeguarding the safety and liberty of its citizens from threats at home and abroad. 2. End cronyism and restore free enterprise A growing economy, increased employment and higher wages will come from traditional American ingenuity and enterprise, not from government. To achieve this end, small businesses need to be em- powered, and the size and scope of Washington need to be reduced so that the hard work and enterprise of Americans can lead a strong, sustained recovery. Ending corporate welfare: There is a growing and pernicious trend of government overreach into the private economy—a trend that stacks the deck in favor of entrenched interests and stifles growth. This budget stops Washington from picking winners and losers across the economy. It rolls back corporate subsidies in the energy sector. It ends the taxpayer bailouts of failed financial insti- tutions, including Fannie Mae and Freddie Mac. It repeals the gov- ernment takeover of health care enacted last year and begins to move toward patient-centered reform. And it reduces the bureauc- racy’s reach by applying private-sector realities to the Federal Gov- ernment’s civilian workforce. Boosting American energy resources: Too great a percentage of America’s vast natural resources remain locked behind bureau- cratic barriers and red tape. This budget lifts moratoriums on safe, responsible energy exploration in the United States, ends Wash- ington policies that drive up gas prices, and unlocks American en- ergy production to help lower costs, create jobs and reduce depend-tjames on DSK6SPTVN1PROD with REPORTS ence on foreign oil. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00016 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 9 Streamlining other government agencies: Domestic government agencies have grown too much and too fast over the past decade, and much of their funding has gone to harmful programs and dead- end projects. This budget starts to restore spending discipline. It builds on efforts undertaken last year to contain the government’s growth, and it targets hundreds of government programs that have outlived their usefulness. 3. Strengthen the social safety net This budget builds upon the historic progress of bipartisan wel- fare reform in the late 1990s. It strengthens Medicaid, food stamps and job-training programs by providing States with greater flexi- bility to help recipients build self-sufficient futures for themselves and their families. Repairing a broken Medicaid system: Medicaid’s flawed financing structure has created rapidly rising costs that are nearly impos- sible to check. Mandate upon mandate has been foisted upon States under the flawed premise that the best ideas for repairing this im- portant health care safety net can come only from Washington. This budget ends that misguided approach and instead converts the Federal share of Medicaid spending into a block grant, thus freeing States to tailor their Medicaid programs to the unique needs of their own populations. Prioritizing assistance for those in need: The welfare reforms of the 1990s, despite their success, were never extended beyond cash welfare to other means-tested programs. This budget completes the successful work of transforming welfare by reforming other areas of America’s safety net to ensure that welfare does not entrap able- bodied citizens into lives of complacency and dependency. Ensuring educational and job-training opportunities for a 21st century economy: The government’s well-intentioned approach to higher education and job training in America has failed those who most need these forms of assistance. Federal tuition subsidies are often captured by (and to a certain extent drive) rapidly rising tui- tion costs for those higher-education programs that should be the first rung on the ladder of opportunity. Meanwhile, dozens of job- training programs suffer from overlapping responsibilities and too often lack accountability. This budget begins to address the problem of tuition inflation and consolidates a complex maze of dozens of job-training programs into more accessible, accountable career scholarships aimed at em- powering American workers with the resources they need to pursue their dreams. 4. Fulfill the mission of health and retirement security This budget puts an end to empty promises from Washington, of- fering instead real security through real reforms. The framework established in this budget ensures no disruptions to existing health and retirement benefit programs for those beneficiaries who have organized their retirements around them, while at the same time building stronger programs that future beneficiaries can count ontjames on DSK6SPTVN1PROD with REPORTS when they retire. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00017 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 10 Saving Medicare: Medicare is facing an unprecedented fiscal challenge. Its failed reliance on bureaucratic price controls and gov- ernment rationing, combined with rising health care costs, is jeop- ardizing seniors’ access to critical care and threatening to bankrupt the system—and ultimately the Nation. This budget saves Medi- care by fixing flaws in its structure so it will be there for future generations. By putting these solutions in place now, this budget ensures that changes will not affect those in and near retirement in any way. When younger workers become eligible for Medicare a decade or more from today, they will be able to choose from a list of guaran- teed coverage options, including a traditional Medicare fee-for-serv- ice plan. This flexibility will allow seniors to enjoy the same kind of choices in their plans that members of Congress enjoy. Medicare will provide a payment to subsidize the cost of the plan. In addi- tion, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks. Reform that em- powers individuals—with a strengthened safety net for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors. Advancing Social Security solutions: The risk to Social Security, driven by demographic changes, is nearer at hand than most ac- knowledge. This budget heads off a crisis by calling on the Presi- dent and both chambers of Congress to ensure the solvency of this critical program. 5. Enact pro-growth tax reform This budget recognizes that the Nation’s fiscal health requires a vibrant, growing private sector. It charts a prosperous path forward by reforming a tax code that is overly complex and unfair. Individual tax reform: The current code for individuals is too complicated, with high marginal rates that discourage hard work and entrepreneurship. This budget embraces the widely acknowl- edged principles of pro-growth tax reform by proposing to consoli- date tax brackets and lower tax rates, with just two rates of 10 and 25 percent, while clearing out the burdensome tangle of loopholes that distort economic activity. Corporate tax reform: American businesses are overburdened by one of the highest corporate income tax rates in the developed world. The perverse incentives created by the corporate income tax do a lot of damage to both workers and investors, yet the tax itself raises relatively little revenue. This budget improves incentives for job creators to work, invest, and innovate in the United States by lowering the corporate rate from 35 percent to a much more com- petitive 25 percent and by shifting to a territorial system that will ensure a level playing field for American businesses. 6. Change Washington’s culture of spending Across the political spectrum, experts agree that the budget proc- ess is badly broken and in need of reform. The process fails to con- trol spending, fails to provide adequate oversight, and fails to allowtjames on DSK6SPTVN1PROD with REPORTS the transparency needed for accountability to the Nation’s citizens. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00018 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 11 Controlling spending: The budget process in Washington contains numerous structural flaws that bias the Federal Government to- ward ever-higher levels of spending. This budget would lock in sav- ings with enforceable spending caps and budget process reforms, limiting what Washington spends and how tax dollars are spent. Enhancing oversight: This budget gives Congress greater tools to perform oversight over wasteful Washington spending. Increasing transparency: This budget promotes reforms that would give taxpayers more information over how Washington is spending their hard-earned dollars. 7. Lift the crushing burden of debt This budget charts a sustainable path forward, ultimately erases the budget deficit completely, and begins paying down the national debt. Americans truly face a monumental choice—a choice that can no longer be avoided. The Path to Prosperity advances the serious conversation begun last year about the future of this exceptional Nation and the funda- mental choices Americans must soon make about the kind of Na- tion they want America to be. This budget would put in place a comprehensive framework to address the Nation’s greatest challenges. It provides an opportunity to initiate the actual work of statecraft. The elected representatives of the American people—in the House of Representatives, in the Senate and in the White House—now must take up this budget and start building the future Americans deserve.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00019 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • Economic Assumptions of the Budget Resolution Introduction The U.S. economy picked up in the final quarter of 2011 but overall growth and job creation remain sub-par. Real gross domes- tic product [GDP] grew by just 1.7 percent in 2011 and private-sec- tor forecasters are calling for growth of 2.2 percent in 2012—well below the 3.0 percent historical trend rate of U.S. growth and just a fraction of the growth pace observed in a typical recovery from recession. Employment increased by 243,000 in January, an en- couraging sign, and the unemployment rate edged down to a 3-year low of 8.3 percent but there is still an enormous ‘‘jobs deficit’’ in the economy. It is sobering to point out that of the nearly 8.8 mil- lion jobs that were lost in the 2008/2009 recession and aftermath, only about one-third have been recovered. Economists now estimate that with such sub-par economic growth the unemployment rate will probably not return to its pre-recession level until very late in the decade. Three key factors are likely to contribute to below-trend U.S. eco- nomic growth in the near term: (1) likelihood of a recession in Eu- rope and fears of global financial market contagion sparked by Eu- rope’s ongoing sovereign debt crisis, (2) prolonged weakness in the U.S. housing market, including a continued decline in home values, (3) only modest job growth, which constrains wage and income growth and therefore consumer spending (which typically accounts for 70 percent of U.S. GDP). In addition, gasoline prices have risen 15 percent since the beginning of the year and will likely rise fur- ther this spring and summer, which promises to reduce consumers’ purchasing power. Noting the sub-par growth outlook and the at- tendant downside risks, the Federal Reserve believes that it will most likely keep interest rates at or near zero until the end of 2014. The Current Economic Situation The current economic data suggest that the U.S. economy is ex- panding at a moderate pace, although the recovery from the reces- sion and financial crisis still promises to be long and difficult. Real GDP grew by 3.0 percent in the fourth quarter of 2011, up from 1.8 percent in the third quarter. Roughly two-thirds of that increase, however, was due to business inventory restocking, a tem- porary boost to GDP that will not be sustained in the coming quar- ters. The economy grew by a sluggish 1.7 percent in 2011 and thetjames on DSK6SPTVN1PROD with REPORTS (23) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00031 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 24 Blue Chip consensus of private-sector forecasters sees GDP rising by just 2.2 percent in 2012. The Federal Reserve has characterized the current economic recovery as ‘‘uneven and modest by historical standards.’’ Total payroll employment rose by 227,000 in February. Recent monthly job gains have been encouraging, though at this pace it would still take until the end of the decade to return to a pre-reces- sion level of unemployment. The unemployment rate remained at a three-year low of 8.3 per- cent in February. Still, a broader gauge of under-employment, which includes people who have stopped looking for work or who can’t find full-time jobs, is still over 15 percent. In addition, the long-term unemployment remains near record levels as the share of the unemployed population who have been out of work for six months or more is 43 percent. The housing market remains a key drag on growth. Housing prices have yet to fully bottom out and have showed some renewed signs of decline in parts of the country. The ratio of home equity to income is at an all-time low—a measure of the enormous amount of housing wealth that has been lost due to the drop in home prices. As households feel less wealthy, they are less likely to spend, which puts a damper on the overall economy. Average U.S. gasoline prices have risen 15 percent so far this year as geopolitical tensions in the Middle East have contributed to a sharp increase in oil prices. Analysts point out that gas prices will likely continue to rise through the spring and summer months, with some experts warning that prices could reach $5 per gallon in some parts of the country. This run-up in prices will have the effect of dampening consumers’ purchasing power. The rise in energy prices is likely to lead to a bump-up in the overall rate of inflation in coming months, though the Federal Re- serve expects this increase to be temporary. The Fed generally ex- pects inflation will run ‘‘at or below’’ its preferred rate of 2.0 per- cent (as measured by the price deflator for personal consumption expenditures) in the coming quarters. The yield on 10-year Treasuries has dipped to an all-time low of just under 2 percent in recent months. Jitters about the debt/ fi- nancial crisis in Europe have caused global investors to seek out a relatively risk-free safe haven. This dynamic has benefited the Treasury market and has helped to push U.S. borrowing rates to very low levels. The stock market has been on a recovery track after posting sharp declines in the latter part of last year. Since dipping to a cy- clical low last October the S&P 500 has gained about 20 percent. This has been due to somewhat more positive U.S. economic data combined with some decline in the fear that the situation in Eu- rope will spark a more serious global financial crisis. The Economic Outlook The economic projections from the administration, the CBO, and private forecasters generally show moderate to robust growth in the next few years, though the range of predictions is relativelytjames on DSK6SPTVN1PROD with REPORTS wide. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00032 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • 26 CBO expects real GDP growth of 2.2 percent in 2012, in line with private-sector forecasters, before slipping to just 1.0 percent in 2013. In its forecast, CBO is obligated to assume all of the sizeable tax increases and spending reductions that are currently built into current law, but which are unlikely to occur in their totality. Be- yond 2013, CBO expects fairly robust annual growth ranging be- tween 3 and nearly 5 percent over the medium term. The adminis- tration’s growth trajectory forecast is generally in line with that of CBO, though on average it is slightly more optimistic on the rate of growth, particularly in the latter part of the decade. In contrast, the private-sector Blue Chip growth forecast is more subdued than either the CBO or the administration, with annual GDP growth failing to breach the 3 percent threshold throughout the 10-year horizon. Most forecasts see the unemployment rate declining slowly from its current elevated level. CBO, for instance, expects the unemploy- ment rate to remain above 7 percent until the middle of the decade. Both CBO and the administration don’t see the unemployment rate falling back to the pre-recession, pre-financial crisis range of just over 5.0 percent until the latter part of the decade. The Blue Chip consensus does not see the unemployment rate dipping below 6 percent at any point in the 10-year horizon. As the economy recovers, the forecasts predict that interest rates will gradually move higher. According to CBO, the 10-year Treas- ury rate, which is currently at an all-time low below 2 percent, will rise to about 4 percent in 2016 and 5 percent towards the end of the decade. Both the administration and the Blue Chip consensus foresee higher interest rates than CBO over both the near and me- dium-term. Rates of inflation are also expected to normalize in the coming years from their current low levels. CBO expects inflation rates to remain quite low for longer than either the administration or the private sector. Under CBO’s forecast, annual growth in the con- sumer price index remains below 2 percent until 2016. In contrast, the Blue Chip consensus sees inflation reaching nearly 2.5 percent as early as 2014. CBO’s annual economic assumptions were adopted for use in the budget resolution and are shown in Table 7.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00034 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION-BY-FUNCTION PRESENTATION The budget resolution often is described as the ‘‘architecture’’ of policy—and the metaphor is fitting in several ways. First, the budget resolution is the one legislative measure in which the U.S. Congress states a framework for the entire Federal Government through a federal budget. Second, the measure allows Congress to establish priorities through the proposed allocation of resources. Third, it establishes total revenue, spending, deficit, and debt lev- els, thus setting overall fiscal policy. The budget resolution implements this architecture through a myriad of technical components—chiefly numbers and procedural mechanisms. Total spending in the budget is divided among 21 budget ‘‘functions.’’ Each function represents a broad area of gov- ernment activities—national defense, international affairs, trans- portation, education, health, and so on. The functions have antecedents dating back decades, but they are not directly linked to specific congressional committees, agen- cies of the Executive Branch, or, for the most part, particular pro- grams; they transcend these units. Because the totals in the func- tions are prospective—the budget is a planning document, not an audit—they are not binding; they simply describe how the Budget Committee views the expected distribution of resources under the budget’s guidelines. But the committee allocations that flow from these function levels (see ‘‘The Congressional Budget Process’’ later in this report) do have a means of enforcement; and in that sense, the function levels in the resolution are relevant to the programs over which legislative committees have jurisdiction. The budget functions presented here are the following: 050 National Defense 150 International Affairs 250 Science, Space, and Technology 270 Energy 300 Natural Resources and Environment 350 Agriculture 370 Commerce and Housing Credit 400 Transportation 450 Community and Regional Development 500 Education, Training, Employment, and Social Services 550 Health 570 Medicare 600 Income Security 650 Social Security 700 Veterans Benefits and Services 750 Administration of Justice 800 General Governmenttjames on DSK6SPTVN1PROD with REPORTS (47) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00055 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 48 900 Net Interest 920 Allowances 950 Undistributed Offsetting Receipts 970 Overseas Deployments and Other Activities When the function totals and committee allocations differ from those estimated in baseline spending projections, it means some form of policy change must occur to meet the budget levels. The budget does not prescribe the specific policies—the committees of jurisdiction make those decisions—but it does drive changes in pol- icy. This budget assumes significant policy changes, and a major re- adjustment of the Federal government’s fiscal course. To dem- onstrate the viability of these assumptions—and to prove the credi- bility of the budget itself—this report offers a range of policy op- tions to help demonstrate how the budget’s fiscal goals could be achieved. These options are illustrative; as noted, any actual policy changes are the discretion of the committees with jurisdiction over the programs involved. Nevertheless, the options are serious pro- posals, the projections are based on Congressional Budget Office es- timates, and the proposals are justified in the report text. They are worthy of consideration when House committees develop their leg- islative proposals.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00056 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 050: NATIONAL DEFENSE Function Summary The first job of the Federal Government is securing the safety and liberty of its citizens from threats at home and abroad. Wheth- er defeating the terrorists who attacked this country on September 11, 2001, combating piracy off the Horn of Africa, or battling insur- gents who would harbor terrorist networks that threaten Ameri- cans’ lives and livelihoods, the men and women of the United States’ military have performed superbly. As reflected in the Na- tional Defense function, this budget provides for the best equip- ment, training, and compensation for their continued success. National Defense includes funds to compensate, train, maintain, and equip the military forces of the United States. More than 95 percent of the funding in this function goes to Department of De- fense [DOD] military activities; the remainder applies to the atomic energy defense activities of the Department of Energy, and other defense-related activities (primarily in connection with homeland security). Funding for the Department of Defense’s non-enduring activities in Afghanistan and Iraq is reflected in Function 970 rather than in this account. Summary of Committee-Reported Resolution The resolution calls for $562.2 billion in budget authority and $621.5 billion in outlays in fiscal year 2013. Most of the spending in the function is discretionary, which in fiscal year 2013 totals $554.2 billion in budget authority and $613.5 billion in outlays. Mandatory spending in 2013 is $7.9 billion in budget authority and $7.9 billion in outlays. The 10-year totals for budget authority and outlays are $6.306 trillion and $6.293 trillion, respectively. The recommended discretionary levels are $2.4 billion above the President’s requested levels and equal to the amounts enacted for fiscal year 2012. With nearly 70,000 U.S. soldiers, airmen, sailors, and marines engaged in combat operations against a fierce and stubborn enemy, it is simply not the time to reduce defense spend- ing. This funding level will ensure adequate resources to maintain a high level of operational readiness in fiscal year 2013 and ad- dress the numerous operational readiness needs identified by the House Armed Services Committee in its Views and Estimates letter on the fiscal year 2013 budget request. This resolution also protects the defense budget from the nearly $1 trillion in indiscriminate, across-the-board cuts that would re- sult from the planned sequester under section 302 of the Budget Control Act of 2011 (see ‘‘Reprioritizing Sequester Savings’’ for fulltjames on DSK6SPTVN1PROD with REPORTS (49) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00057 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 50 details on how this budget addresses the sequester). Instead of the 10 percent reduction that would result from the sequester, this res- olution provides for modest real growth in each of the out-years of the budget resolution. This funding path allows for the much-need- ed modernization of the military’s conventional and strategic weap- ons systems. This resolution does not, however, provide a blank check for the Department of Defense. More than two decades after the legal re- quirement was imposed, DOD is still not auditable. Moreover, the civilian workforce at DOD has grown by 89,000 personnel (11 per- cent) since 2008. The Department can and should become a better steward of the taxpayer funds entrusted to it and more efficient in how it chooses to expend those funds. Secretary Panetta is to be commended for his focus on achieving auditability, but the poor track record of DOD in achieving pre- vious audit improvement plans raises serious doubt as to the likeli- hood of success in these efforts. In 2011, the Department made a good start toward becoming more efficient with the $78 billion in efficiency savings that were proposed by Secretary Gates and incorporated into the budget reso- lution passed by the House of Representatives. Secretary Panetta has proposed an additional $60 billion in savings through the more disciplined use of defense resources. This resolution assumes these savings can be achieved, but cautions against ephemeral savings that merely push costs outside DOD’s five-year planning window or that produce near-term savings but result in greater long-term costs. A robust national defense requires a substantial commitment of national resources, and Congress and the administration must re- main vigilant to ensure the national defense program is executed efficiently and accountably. The Armed Services Committee has conducted an aggressive oversight agenda in the 112th Congress to ‘‘ensure that the Department of Defense is operated efficiently and with fiscal discipline in order to maximize the return on the tax- payers’ investments.’’ A critical element of that oversight agenda is a review of acquisition programs with an eye toward reevaluating those programs that ‘‘no longer represent the best value for the taxpayer.’’ The Committee commends the Armed Services Com- mittee for its work in this area and encourages further detailed ex- amination of ways for the United States to maximize the value of every defense dollar. Illustrative Policy Options DISCRETIONARY SPENDING Fully Fund Military Modernization. The new strategic orienta- tion toward the Asia-Pacific region announced by the President will place greater reliance on the size and capability of U.S. air and naval forces. Unfortunately the budget requested by the President in furtherance of this strategy does little to address the moderniza- tion needs of these forces. General Norton Schwartz, Chief of Staff of the Air Force, hastjames on DSK6SPTVN1PROD with REPORTS noted that today’s Air Force is ‘‘already smaller and older than at VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00058 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 51 the end of the post-Cold War downsizing.’’ 2 The President’s budget proposes to delay the Air Force’s major modernization program. The President’s budget also proposes to abandon the long- standing goal of expanding the naval battle fleet to 313 ships. In- stead, the President’s budget would result in a persistently smaller fleet than at any time since the Second World War. While U.S. naval forces unquestionably have tremendous capabilities, any bat- tle group can only be in one place at one time. This reality is why, despite the purported ‘‘pivot’’ to Asia, the Chief of Naval Oper- ations, Admiral Jonathan Greenert, has said that there will not be any increase in the naval presence in the region.3 By providing for real budget growth in future years, this budget resolution ensures that the men and women of the armed forces will have the resources needed to procure the equipment and capa- bilities that will be essential to protecting American interests abroad. High priorities include ensuring adequate funding for the mod- ernization of U.S. nuclear weapons, forces, and supporting infra- structure in accord with the President’s commitments made at the time of the ratification of the New START treaty; and restoring needed funding to the shipbuilding and naval aircraft accounts to ensure the full potency of U.S. carrier strike groups. Reject cost-shifting. The President’s budget request assumes over $42 billion in savings over the next five years from restructuring several major procurement programs. What the President’s budget doesn’t say is that most of those ‘‘savings’’ are merely shifted into the second five years of the budget window when the only means of actually achieving them will be additional draconian cuts in mili- tary end-strength and compensation. This budget rejects this shell game, which would otherwise result in the delayed fielding of need- ed military capabilities; increased costs for major procurement pro- grams; and an unwise and precipitous reduction in the size of the armed forces. Air National Guard. The Air National Guard remains a critical component of our national air defense system. This budget recog- nizes the relative cost-effectiveness of the Air Guard, which cur- rently provides 35 percent of the U.S. Air Force’s capability for 6 percent of the budget. Forty-nine (49) of our nation’s governors have called on the U.S. Air Force to reconsider its fiscal year 2013 budget request wherein the Air National Guard absorbs 59 percent of the total aircraft budget reductions and nearly six times the per capita personnel reductions. The Committee takes a continuing in- terest in ensuring that precipitous defense spending reductions do not jeopardize the nation’s security. 2 General Norton Schwartz, ‘‘Air Force Strategic Choices and Budget Priorities Brief at the Pentagon,’’ January 27, 2012. http://www.defense.gov/transcripts/transcript.aspx?transcriptid =4965. 3 Sandra Jontz, ‘‘Greenert reviews Navy’s upcoming changes with Naples sailors,’’ Stars andtjames on DSK6SPTVN1PROD with REPORTS Stripes, February 23, 2012. http://www.stripes.com/mobile/news/greenert-reviews-navy-s-up- coming-changes-with-naples-sailors-1.169556. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00059 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 150: INTERNATIONAL AFFAIRS Function Summary The foreign affairs budget plays a critical role in advancing American interests abroad, including national security. This budget includes programs pertaining to international development and hu- manitarian assistance; international security assistance; the con- duct of foreign affairs; foreign information and exchange activities; and international financial programs. The primary agencies respon- sible for executing these programs include the Departments of Ag- riculture, State, Treasury, the United States Agency for Inter- national Development [USAID], and the Millennium Challenge Corporation [MCC]. Over the past 10 years, Function 150 funding has more than doubled, increasing by 135 percent. This budget reflects a thorough re-evaluation of accounts in Function 150 and prioritizes programs that are both integral to the core budget and that achieve desired results in an efficient manner. U.S. interests are best achieved when these goals are met, and taxpayer dollars should only be used to fund programs that are effective. This budget assumes continued funding only for those programs critical to advancing U.S. interests abroad. Funding for the State Department and USAID’s non-enduring ci- vilian activities in the frontline states of the global war on ter- rorism is reflected in Function 970 rather than in this account. Summary of Committee-Reported Resolution For fiscal year 2013, the resolution proposes $43.128 billion in total budget authority (including mandatory and discretionary spending) and $46.999 billion in outlays. For fiscal year 2013, Function 150 discretionary spending, which accounts for the vast majority of the budget, is $40.905 billion in budget authority and $47.522 billion in outlays. Mandatory spending for 2013 is $2.223 billion in budget authority and ¥$523 million in outlays. (The neg- ative outlay figure reflects receipts from foreign military sales and foreign military financing transactions.) Over 10 years, budget au- thority totals $421.981 billion, with outlays of $462.974 billion. Illustrative Policy Options While final policy and funding decisions will ultimately be made by the committees of jurisdiction, the following policies are rec- ommendations for these committees on how to meet the proposed budget targets.tjames on DSK6SPTVN1PROD with REPORTS (53) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00061 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 54 DISCRETIONARY SPENDING Consolidate USAID’s Development Assistance [DA] with MCC. The United States has two primary foreign development assistance programs: USAID’s Development Assistance program and the Mil- lennium Challenge Corporation [MCC]. Investing in foreign aid and helping other nations rise towards prosperity keeps the United States safe and strengthens the economy by establishing new trad- ing partners and markets. However, development assistance is only worthwhile if it produces results for aid recipients. America’s experience with having two development assistance programs has shown that MCC’s model better reflects this principle when compared to DA. MCC’s emphasis on outputs rather than in- puts needs to be the foundation of all U.S. foreign assistance pro- grams. Other elements of MCC’s model that should be extended throughout U.S. development assistance programs include: • strict requirements on recipient countries to prove strong commitments to good governance, economic freedom, and in- vestment in their citizens in order to be considered for aid; • willingness of the U.S. Government to terminate assist- ance if an aid recipient starts slipping on these critical commit- ments; • country ownership, which requires the country to plan its own aid project and lead implementation; and • strict timelines for aid projects. These principles are critical to ensuring the long-term sustain- ability of projects once U.S. assistance concludes, thus avoiding cre- ating a culture of dependency on U.S. aid. USAID claims to be moving toward adoption of more accountable policy standards, country ownership, and timetables, but success remains elusive. MCC’s model is more effective and efficient in delivering foreign aid and results in the most benefits for the taxpayer dollar. For these reasons, this budget proposes MCC to be the lead agency on foreign development assistance. Eliminate Complex Crises Fund [CCF]. Established in 2010 to support stabilization activities and conflict prevention in countries demonstrating high risks of insecurity, the CCF has never been au- thorized by the committee of jurisdiction and is duplicative of the missions performed by the recently re-organized Bureau of Conflict Stabilizations at the State Department. The Bureau of Conflict and Stabilization Operations is similarly responsible for developing a ci- vilian capacity to prevent and counter crises in nations where secu- rity issues are of high concern. Due to mission overlap, eliminating the CCF and allowing the Bureau of Conflict and Stabilization Op- erations to lead conflict prevention efforts is recommended. The House Committee on Foreign Affairs makes the same recommenda- tion in its Views and Estimates letter for fiscal year 2013. Eliminate Funding for Peripheral Foreign Affairs Institutions. The U.S. funds multiple independent agencies and quasi-private in- stitutions through the foreign affairs budget. Included in this list are the Inter-American Foundation, the African Development Foundation, the East-West Center, the Asia Foundation, and the Center for Middle Eastern-Western Dialogue. These institutions alltjames on DSK6SPTVN1PROD with REPORTS engage in programming that is redundant of the State Department VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 55 and USAID activities. Consolidating and eliminating funding for multiple institutions that perform similar tasks will make U.S. en- gagement with the world more efficient and cost-effective. Further, some of these organizations already receive private funding, and could continue on with non-government funds. Reduce Funding for Broadcasting Board of Governors. The Broadcasting Board of Governors (BBG) manages all U.S. civilian international broadcasting and helps connect people around the world in support of democracy. While the goals of the BBG are laudable, its budget has increased by almost 40 percent over the past decade and some of these programs are proving to be less ef- fective than intended. Further, although the Cold War ended over 20 years ago, the BBG still provides broadcasting services to 10 Eastern European countries. Given the fiscal situation of the U.S. Government, the time has come to reevaluate the usefulness of some of these services and to reduce funding accordingly. Reduce Educational and Cultural Exchange Programs. The pur- pose of educational and cultural exchange programs is to encourage mutual understanding between Americans and citizens around the world through scholarship and leadership programs. While this mission is laudable, exchange programs are not an essential compo- nent of the foreign affairs budget. Over the past five years, funding for these programs has increased by 24 percent. The administration has requested less funding for these activities relative to last year’s spending levels. This budget reflects the priority accorded these ac- tivities. Eliminate Contributions to Clean Technology Fund and Strategic Climate Fund. The Clean Technology and Strategic Climate Funds both support energy-efficient technologies intended to reduce en- ergy use and avert climate change. Both of these funds were cre- ated by the Obama administration in fiscal year 2010. At a time when fiscal restraint is necessary, expanding U.S. international as- sistance into new areas is not financially wise. Further, as dis- cussed elsewhere in this budget (see Function 250), the U.S. track record with energy-related research and development is poor. This budget recommends the elimination of both programs, reserving U.S. foreign assistance for core foreign policy interests. Reduce Contributions to International Organizations and Pro- grams. The United States voluntarily contributes to several multi- lateral organizations and programs to promote U.S. interests and achieve transnational goals. These contributions are duplicative of funding provided in the Contribution to International Organiza- tions [CIO] account, which includes obligatory payments to inter- national organizations with which the United States has signed treaties. While this budget fully funds the CIO account, it does not support voluntary contributions to the duplicative International Or- ganizations and Programs account. Eliminate Feed the Future. Initiated by the Obama administra- tion in 2009, Feed the Future aims to end global food insecurity through investments in nutrition and agriculture abroad. While ad- dressing the issues of poverty and malnutrition around the globe is important, the U.S. Government’s fiscal condition does not per- mit the expansion of U.S. foreign assistance initiatives, especiallytjames on DSK6SPTVN1PROD with REPORTS ones that overlap with existing programs. The United States cur- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00063 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 56 rently has two other major food aid programs: Food for Peace (the primary food aid account) and the McGovern-Dole International Food for Education and Child Nutrition Program. Both of these aid programs address global food insecurity in the world’s poorest countries, including through agricultural development efforts. This budget reflects a need to consolidate our food aid programs in order to eliminate associated costs with mission redundancy. Reduce funding for USAID’s International Disaster Assistance. The International Disaster Assistance [IDA] account prepares for and mitigates emergencies overseas by providing humanitarian as- sistance to individuals affected by disasters and conflict. While America has always been the first to assist countries experiencing catastrophe, its resources are limited and funding levels need to re- flect this reality. The President’s request for IDA, $960 million, is an 83 percent increase from spending levels five years ago. This dramatic increase in spending is not representative of the 10-year spending average on international disasters, which is $590 million, nor the 20-year average, $380 million. It is time to reassess fund- ing for the IDA account and adjust funding levels to be more reflec- tive of historical disaster trends.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00064 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY Function Summary The largest component of this function—about half of total spending—is for the space flight, research, and supporting activi- ties of the National Aeronautics and Space Administration [NASA]. The function also contains general science funding, including the budgets for the National Science Foundation [NSF] and the De- partment of Energy [DOE] Office of Science. Spending for this function has grown by about 9 percent since President Obama took office. Summary of Committee-Reported Resolution The resolution calls for $28 billion in budget authority and $29.2 billion in outlays in fiscal year 2013. Nearly all the spending in the function is discretionary, which totals $27.9 billion in 2013 budget authority, and $29.1 billion in outlays. Mandatory budget authority in 2013 is $100 million, with $116 million in related outlays. The 10-year totals for budget authority and outlays are $302.6 billion and $301.7 billion, respectively. The budget reduces excess and unnecessary spending, while sup- porting core government responsibilities. The resolution preserves basic research, providing stable funding for NSF to conduct its au- thorized activities in science, space and technology basic research, development and STEM education. The budget supports the fiscal year 2013 requested level for NASA and recognizes the vital stra- tegic importance of the United States remaining the pre-eminent space-faring nation. In the President’s request, the administration again shifted priorities away from the 2010 NASA authorization, allocating $830 billion to commercial cargo and crew initiatives. This budget realigns funding in accordance with the NASA author- ization and its specified spending limits to support robust space ca- pability, allow for exploration beyond low Earth orbit, and support our aerospace workforce and scientific as well as educational base. While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set priorities and achieve efficiencies, it does not take the arbitrary approach that will result from the Budget Control Act’s sequester. The House Republican budget replaces the sequester. If not replaced, based on staff estimates, this function would be reduced by another $2.0 bil- lion below the committee recommendation in fiscal year 2013.tjames on DSK6SPTVN1PROD with REPORTS (57) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00065 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 58 Illustrative Policy Options DISCRETIONARY SPENDING The committees of jurisdiction will determine policies to align with the spending levels in the resolution. The options below are offered as illustrations of the kinds of proposals that can help meet the budget’s fiscal guidelines. Restore Core Government Responsibilities. Spending for the De- partment of Energy’s Office of Science included some areas, such as biological and environmental research, that could potentially crowd out private investment. The resolution levels support pre- serving the Office of Science’s original role as a venue for groundbreaking scientific discoveries and a driver for innovation and economic growth, while responsibly paring back applied and commercial research and development. Reduce Expenses for the DHS Science and Technology. The com- mittee recommends reductions in management and administrative expenses for the Department of Homeland Security’s [DHS] Direc- torate of Science and Technology, while shifting funding resources to frontline missions and capabilities.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00066 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 270: ENERGY Function Summary This category includes civilian energy and environmental pro- grams of the Department of Energy [DOE]. Function 270 also in- cludes the Rural Utilities Service of the Department of Agriculture, the Tennessee Valley Authority [TVA], the Federal Energy Regu- latory Commission, and the Nuclear Regulatory Commission. (It does not include DOE’s national security activities—the National Nuclear Security Administration—which are in Function 050, or its basic research and science activities, which are in Function 250.) Since the start of the current administration, total outlays in Function 270 have increased by almost 390 percent. The President has installed a heavy-handed compliance culture dependent on reg- ulations and spending on administration-favored constituencies. Regulations have cost people and small businesses some $1.75 tril- lion per year, according to a report from the Small Business Ad- ministration, including $281 billion for environmental regulations that disproportionately hit small businesses.4 The President has also stifled domestic energy production by blocking or delaying pro- duction both onshore and offshore, destroying jobs and idling Amer- ican energy sources. As the administration took action to stifle pri- vate-sector development of domestic energy resources, it dramati- cally increased funding for favored energy sectors. The stimulus alone allocated $80 billion of taxpayers’ dollars specifically for po- litically favored renewable-energy interests. The results are plain to see: gasoline prices have more than dou- bled since the President took office and the administration has only created additional barriers for needed capital investment and job creation. Burdensome and ineffective regulations have driven up the prices of many products and services. For example: In executing a previously enacted ban on traditional incandescent light bulbs, the current administration tried to promote a ‘‘green’’ replacement bulb by holding a contest. The ‘‘winning’’ bulb costs $50—a 4,900 per- cent increase over the price of a traditional incandescent bulb. This policy will now have taxpayers paying twice—once by providing $10 million in prize money for this contest, and again in the form of more expensive light bulbs. All this for little gain. According to a 2011 Congressional Re- search Service report, ‘‘The potential for job creation has become a key factor in evaluating renewable energy investment incentives 4 Nicole V. Crain and W. Mark Crain, ‘‘The Impact of Regulatory Costs on Small Firms,’’ Small Business Research Survey, September 2010.tjames on DSK6SPTVN1PROD with REPORTS (59) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00067 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 60 and programs, [yet] quantifying and measuring green job creation and growth has been difficult.’’ 5 Summary of Committee-Reported Resolution The resolution calls for $2 billion in budget authority and $8.4 billion in outlays in discretionary spending in fiscal year 2013. Mandatory spending in 2013 is ¥$5 billion in budget authority and $983 million in outlays. The negative balances reflect the incoming repayment of loans, receipts from the sale of electricity produced by Federal entities, and charges for the disposal of nuclear waste, which are accounted for as ‘‘negative spending.’’ The 10-year totals for budget authority and outlays are $21.7 billion and $45.1 billion, respectively, for discretionary spending. The 10-year totals for budget authority and outlays are ¥$15.4 billion and ¥$14.8 bil- lion, respectively, for mandatory spending. The large disparity be- tween budget authority and outlays results mainly from a large in- fusion of stimulus funds that are still being expended nearly four years later. The function grew almost four-fold since the start of the Obama administration because of Recovery Act funding. Over the course of the decade, outlays return to more normal ranges. The resolution reduces funding for non-core energy research, loan guarantees for lower-demand programs, and excess and unneces- sary spending in the DOE’s civilian accounts, which received large funding levels in the stimulus bill. Illustrative Policy Options The committees of jurisdiction will determine policies to align with the spending levels in the resolution. The options below are offered as illustrations of the kinds of proposals that can help meet the budget’s fiscal guidelines. DISCRETIONARY SPENDING Reduce Administrative Costs at DOE. The resolution supports streamlining and boosting accountability of vendor support and ad- ministrative costs across DOE’s offices. The Government Account- ability Office described the vendor selection and procurement proc- ess as decentralized and fragmented in the agency. This budget supports better governance and consolidation of contract manage- ment and procurement processes across functions to reduce costs. Scale Back Corporate Subsidies in the Energy Industry. The reso- lution provides sufficient funding for essential government mis- sions, including energy security and basic research and develop- ment. It recommends paring back spending in areas of duplication and non-core functions, such as applied and commercial research and development projects best left to the private sector. For exam- ple, renewable projects have received substantial subsidies. Accord- ing to the Energy Information Administration, on a dollar-per-unit- of-production basis, the level of subsidies received by the wind and solar industries were almost 100 times greater than those for con- ventional energy. This does not include the $27.2 billion allocated 5 Phillip Brown and Molly Sherlock, ‘‘ARRA Section 1603 Grants in Lieu of Tax Credits fortjames on DSK6SPTVN1PROD with REPORTS Renewable Energy: Overview, Analysis and Policy Options,’’ Congressional Research Service, March 2011. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00068 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 61 in the 2009 ‘‘stimulus’’ bill for energy efficiency and renewable en- ergy research and investment. In addition, according to the Con- gressional Budget Office [CBO], provisions to benefit energy effi- ciency and renewable energy accounted for 78 percent of the budg- etary cost of Federal energy-related tax preferences in 2011. The budget aims to roll back such Federal intervention and corporate welfare spending across energy sectors. MANDATORY SPENDING Rescind Unobligated Balances in DOE’s Green Subsidies and Loan Portfolio. The budget recommends rescinding unobligated bal- ances in DOE’s loan portfolio. Since its introduction in the 2009 stimulus bill, DOE has issued over $20 billion in new loans and loan guarantees for private-sector loans for renewable energy projects that would not otherwise have been market-viable. Al- ready, multi-million dollar projects that were labeled as successes have failed. The first renewable energy loan guarantee recipient, solar start- up Solyndra, received a loan guarantee for $535 million in the fall of 2009, even after repeated warnings from career Federal financial analysts. In the spring of 2010, it failed to complete its initial pub- lic offering after an independent audit questioned the ongoing via- bility of the firm. Then, in the fall of 2010, the firm closed one of its manufacturing facilities and laid off 180 workers. Finally, the firm declared bankruptcy and laid off 1,100 employees only 15 months after President Obama visited a company factory. The Advanced Vehicle Technology Manufacturing program was intended to provide debt capital to domestic auto manufacturers to fund projects that help vehicles made in the United States meet higher mileage requirements. However, the funds have largely been unused as production has not met current demand. Loan beneficiaries have included manufacturers shifting jobs overseas, such as Fisker, which was provided over $500 million and ended up assembling cars in Finland. Moreover, Americans deserve the most honest, accurate assess- ment of how Washington spends their tax dollars. Yet the costs of DOE’s loans are currently calculated using the inadequate method- ology prescribed in the Federal Credit Reform Act [FCRA]. Under FCRA rules, government-backed loans are discounted at risk-free interest rates—the interest rates on U.S. Treasury securities. As CBO has stated and the White House’s own independent analysis has acknowledged, by incorporating market-based risk premiums, fair-value estimates recognize the financial risks that the govern- ment assumes when issuing credit guarantees. Repeal Stimulus-Driven Borrowing Authority Specifically for Green Transmission. The $3.25 billion borrowing authority in the Wester Area Power Administration’s [WAPA] Transmission Infra- structure Program provides loans to develop new transmission sys- tems aimed solely at integrating renewable energy. To date, WAPA has announced only one project under the borrowing authority: a wind transmission project owned by a foreign company. This au- thority was inserted into the stimulus bill without the opportunitytjames on DSK6SPTVN1PROD with REPORTS for debate. Of most concern, the authority includes a bailout provi- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00069 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 62 sion that would require American taxpayers to pay outstanding balances on projects that private developers fail to repay. Eliminates Oil and Gas Research and Development Program. The Ultra-Deepwater and Unconventional Natural Gas and Other Pe- troleum Research Fund is primarily operated by a private-sector consortium and duplicates efforts already made by the private in- vestors. The resolution supports prioritizing Federal funding and preventing Federal investment from crowding out private invest- ment across energy sectors.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00070 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT Function Summary Spending on programs contained in the Natural Resources and Environment function has increased 20.4 percent since the start of the current administration. The budget resolution recognizes the importance of these activities—which include overseeing water re- sources, conservation, land management, and recreational re- sources—but bigger government has not equated to better govern- ment, and the increase in resources has only invited mismanage- ment and duplication. The fiscal year 2013 budget resolution builds on last year’s reso- lution and supports the Nation’s enduring energy policy priorities— economic prosperity, lower gasoline and energy prices, and greater revenue generation from domestic energy production—while mov- ing toward market-based solutions for sustainable energy sources. The resolution draws on the House Republicans’ American Energy Initiative, which seeks to advance an all-of-the-above energy ap- proach for the United States. The administration has blocked and delayed domestic energy production both onshore and offshore, costing jobs and sidelining American energy sources at a time of rising gasoline prices and in- stability in the Middle East and North Africa. The budget resolu- tion provides for a more measured approach, allowing for more re- sources from bonus bids, rents, royalties, and fees as a result of unlocking domestic energy supplies in a safe, environmentally re- sponsible manner. The budget also encourages the development of American-made renewable and alternative energy sources, while affirming the position that environmental stewardship and eco- nomic growth are not mutually exclusive goals. In addition, the budget recognizes the importance of preserving significant habitats, while properly maintaining America’s existing public lands. The Federal Government owns and controls 650 mil- lion acres of land in the United States—one out of every three acres—especially in areas of the western United States. But the government has not adequately maintained this land, some of which could return value to States and counties through more pro- ductive use. The Federal Government opts instead to acquire more while neglecting maintenance and upkeep of what it already con- trols. While the President’s budget almost doubles funding for the Land and Water Conservation Fund [LWCF] to acquire more land—from $255 million in fiscal year 2008 to $450 million in his fiscal year 2013 budget—Federal lands suffer from a current main- tenance backlog that measures in the billions of dollars. The gov-tjames on DSK6SPTVN1PROD with REPORTS (63) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00071 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 64 ernment has a responsibility to maintain and care for existing re- sources before acquiring more land. In addition, the budget acknowledges the importance of main- taining our ports and waterways to encourage commercial deep- draft navigation and economic competitiveness. In fiscal year 2012, a total of $898 million was appropriated from the Harbor Mainte- nance Trust Fund [HMTF], an increase of $109 million over the ad- ministration’s request. However, there continues to be a large bal- ance in the fund and outstanding harbor maintenance needs. The Natural Resources and Environment category consists of major departments and agencies such as the Department of the In- terior, which includes the National Park Service [NPS], the Bureau of Land Management [BLM], the Bureau of Reclamation, and the Fish and Wildlife Service [FWS]; conservation-oriented and land management agencies within the Department of Agriculture [USDA] including the Forest Service; the National Oceanic and At- mospheric Administration [NOAA] in the Department of Com- merce; the Army Corps of Engineers; and the Environmental Pro- tection Agency [EPA]. The discussion below elaborates on the budg- et resolution’s recommended policies in these areas. Summary of Committee-Reported Resolution The resolution calls for $33.3 billion in budget authority and $37.9 billion in outlays in fiscal year 2013. Discretionary budget authority in 2013 totals $30.6 billion, with $35.4 billion in related outlays; mandatory spending is $2.7 billion in budget authority and $2.4 billion in outlays. Over 10 years, budget authority totals $331.4 billion, and outlays are $349.3 billion. Illustrative Policy Options The resolution focuses on paring back unnecessary spending to carry out overreaching regulatory expansion. This budget also em- phasizes core government responsibilities, while reducing spending in areas of duplication or non-core functions. While the actual poli- cies will be determined by the committees of jurisdiction, options to meet budget targets include those listed below. DISCRETIONARY SPENDING Focus on Maintaining Existing Land Resources. Annual funding for the Land and Water Conservation Fund has typically ranged between $250 million and $450 million. The President’s budget re- quests $450 million for fiscal year 2013, but this allocation cannot be used for maintenance. As noted previously, the Federal Govern- ment already is struggling with a maintenance backlog on the mil- lions of acres it controls—a backlog totaling between $13.2 and $19.4 billion—but the administration is seeking to acquire even more land. This budget focuses on eliminating the maintenance backlog before moving to acquire additional lands. Streamline Climate Change Activities Across Government. This budget resolution reduces spending for government-wide climate change-related activities and recommends better coordination of programs and funds to eliminate duplicative and unnecessarytjames on DSK6SPTVN1PROD with REPORTS spending. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00072 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 65 Streamline Fragmented and Overlapping Agency Programs. The resolution supports consolidating programs across Federal agencies and reducing spending in areas identified by the Government Ac- countability Office [GAO], bipartisan deficit reduction commissions, and H.R. 1. These programs include overlapping diesel emission monitoring programs. GAO identified 14 fragmented programs at Energy, DOT and EPA whose missions cover reducing mobile- source diesel emissions, resulting in duplication of efforts and un- necessary funding sometimes going to the same recipients. The President’s Fiscal Commission also identified hundreds of millions of dollars in water treatment efforts duplicated across the Army Corps of Engineers, EPA and USDA, not pertaining in some cases to these agencies’ core missions. MANDATORY SPENDING Revise and Reauthorize the Bureau of Land Management’s Land Sales Process. Instead of requiring that all proceeds from land sales be used to acquire other parcels of land and to cover sales ex- penses, this option would direct that 70 percent of the proceeds, net of expenses, go to the Treasury for the purposes of deficit reduction by reauthorizing and revising the Federal Land Transaction Facili- tation Act and other land management statutes. It would limit the Department of the Interior’s share of the receipts to $60 million per year (plus an additional amount to cover BLM’s administrative costs) for land acquisition and restoration projects on BLM lands. The option would also reduce the amount of Federal spending not subject to regular oversight through the congressional appropria- tion process. The change would reduce the Federal budget deficit and ensure that U.S. taxpayers benefit directly from land sales. Stop Mine Cleanup Payments to States with Certified Reclaimed Mines. The Federal Government collects fees from coal mining com- panies to restore abandoned mining sites. Money from those fees is paid to States to restore abandoned mines within their state. However, several States have successfully restored all of their abandoned mining sites but are still permitted to use the federal mine cleanup payments. Effectively, for the States that have been ‘‘certified’’ as having successfully restored critical mining sites, the mine payments serve as an unrestricted Federal subsidy. Several tribal governments also receive payments despite having already remediated all contaminated mining sites on their land. The ad- ministration has proposed terminating these mine reclamation pay- ments to States that no longer use them for their intended purpose, and this budget proposes terminating them as well.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00073 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 350: AGRICULTURE Function Summary The agriculture function includes funds for direct assistance and loans to food and fiber producers; export assistance; market infor- mation; inspection services; and agricultural research. Farm policy is driven by the Food, Conservation and Energy Act of 2008 (the Farm Bill), which provides farmers protection against uncertain- ties, such as poor weather conditions and unfavorable market con- ditions. Farm safety net programs are divided into three areas: com- modity programs, crop insurance, and supplemental disaster assist- ance. Commodity programs, which the Farm Bill authorizes through the 2012 crop/marketing year, include both direct pay- ments and price-based counter-cyclical payments; the marketing assistance loan program; and the average crop revenue election payment program. Due to recent strength in agricultural markets, outlays for price-based programs have declined. Nevertheless, di- rect payments, which do not vary with market prices, have re- mained steady at $5 billion each year. Crop insurance outlays, while volatile, have trended sharply higher and averaged $5.6 bil- lion over 2008–10, more than double their 2000–02 average level. With farm income, crop prices, and Federal deficits hitting new highs, and with food prices going up, it is time to reform agricul- tural support programs, while maintaining a strong safety net for farmers. Summary of Committee-Reported Resolution The resolution calls for $21.7 billion in budget authority and $24.6 billion in outlays in fiscal year 2013. Discretionary spending in fiscal year 2013 is $5.9 billion in budget authority and $5.8 bil- lion in outlays; mandatory spending, the majority of the function’s total, is $15.8 billion in budget authority, with outlays of $18.8 bil- lion. The 10-year totals for budget authority and outlays are $197.3 billion and $198.2 billion, respectively. Illustrative Policy Options Specific policies in this function will be determined by the com- mittees of jurisdiction. Among the options they may wish to con- sider are the following. MANDATORY SPENDING Reform Agricultural Commodity and Insurance Programs. Under this option, mandatory agricultural outlays, other than food and nutrition programs, will be reduced by $29.3 billion relative to thetjames on DSK6SPTVN1PROD with REPORTS (67) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00075 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 68 currently anticipated levels from fiscal year 2013 through fiscal year 2022. These savings could be achieved by reducing both direct payments and crop insurance subsidies, and by reforming export assistance programs. The Committee on Agriculture is responsible for implementing these reductions, and to maintain the commit- tee’s flexibility, this option assumes the savings will not take effect until the beginning of the next Farm Bill. Farmers will benefit greatly from other provisions in this budget, including regulatory relief, the maintenance of low capital gains and estate taxes, and lower interest rates due to reduced Federal borrowing.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00076 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 370: COMMERCE AND HOUSING CREDIT Function Summary The Federal Government’s commerce and housing activities should focus limited resources on efforts to bolster free enterprise and economic growth. Such an approach would have the additional direct benefit of reducing government spending, easing the demand for higher taxes or more borrowing, and curbing corporate welfare in the housing, financial services, and telecommunications indus- tries. This budget calls for an end to the cycle of future bailouts perpetuated by the financial regulation law authored by Senator Dodd and Representative Frank, as well as putting a stop to tax- payer subsidies and bailouts for Fannie Mae and Freddie Mac. This budget function has four components: mortgage credit; the Postal Service (mostly off budget); deposit insurance (negligible spending due to reserve-supporting fees and the like); and other commerce activities (the majority of the net discretionary and man- datory spending in this function). The mortgage credit component of this function includes housing assistance through the Federal Housing Administration [FHA], the Federal National Mortgage Association [Fannie Mae], the Federal Home Loan Mortgage Corporation [Freddie Mac], the Government National Mortgage Association [Ginnie Mae], and rural housing programs of the Department of Agriculture. The function also in- cludes net postal service spending and spending for deposit insur- ance activities of banks, thrifts, and credit unions. Finally, most of the Commerce Department is provided for in this function, includ- ing the International Trade Administration, the Bureau of Eco- nomic Analysis, the Patent and Trademark Office, the National In- stitute of Standards and Technology, the National Telecommuni- cations and Information Administration, and the Bureau of the Census. Also funded through this function are independent agen- cies such as the Securities and Exchange Commission [SEC], the Commodity Futures Trading Commission, the Federal Trade Com- mission, the Federal Communications Commission [FCC], and the majority of the Small Business Administration [SBA]. Summary of Committee-Reported Resolution In this function, the budget resolution provides for ¥$7.9 billion in budget authority and ¥$3.9 billion in outlays in fiscal year 2013. Of that total, 2013 discretionary spending is ¥$7.8 billion in budget authority and ¥$6.1 billion in outlays. Mandatory spending in 2013 is ¥$0.1 billion in budget authority and $2.1 billion in out- lays. The function totals over 10 years are $22.2 billion in budget authority and ¥$125.9 billion in outlays.tjames on DSK6SPTVN1PROD with REPORTS (69) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00077 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 70 On-budget totals for fiscal year 2013 are ¥$7.1 billion in budget authority and ¥$3.2 billion in outlays. Of these amounts, discre- tionary budget authority is ¥$1.1 billion, with outlays of ¥$1.1 billion as well. Mandatory on-budget spending for fiscal year 2013 is $0.9 billion in budget authority and $3.2 billion in outlays. Over 10 years, the on-budget totals are $45.3 billion in budget authority and ¥$102.9 billion in outlays. Negative discretionary totals for budget authority and outlays mainly reflect the negative subsidy rates applied to certain loan and loan guarantee programs scored under the guidelines of the Federal Credit Reform Act [FCRA], such as FHA and Ginnie Mae programs. It should be noted that FHA loans are scored using a different accounting method than the fair-value estimates that CBO applies to Fannie Mae and Freddie Mac, resulting in budget disparities (see discussion under Mandatory Spending). Negative mandatory totals for outlays in this function mainly re- sult from the wind-down of several programs created in response to the financial crisis that initially produced large positive outlays, such as those associated with the Troubled Asset Relief Program [TARP] and various deposit insurance programs. It should be noted that from 2008 through 2009, total outlays in Function 370 were a positive $319 billion. Off-budget totals for fiscal year 2013 are ¥$0.8 billion in budget authority and ¥$0.8 billion in outlays. Of these amounts, discre- tionary budget authority is $0.26 billion in budget authority and $0.26 in outlays. Over 10 years, the discretionary off-budget totals are $3.1 billion in budget authority and $3.1 billion in outlays. Mandatory off-budget spending for fiscal year 2013 is ¥$1.1 billion in budget authority and ¥$1.1 billion in outlays. Over ten years, the mandatory off-budget totals are ¥$26.1 billion in budget au- thority and ¥$26.1 billion in outlays. The negative totals for budg- et authority and outlays in the off-budget portion of this function represent savings from our two policy proposals described below in addition to monies received by the Treasury from the U.S. Postal Service Public Enterprise Fund. Illustrative Policy Options The resolution aims to limit and reform programs in this func- tion to reduce spending; to limit the Federal Government’s role in housing, financial, and telecommunications markets; and to curtail the corporate welfare that distorts and misdirects the flow of cap- ital in the free market. While the committees of jurisdiction will de- termine the actual policies in pursuit of these goals, the options below offer several potential approaches. DISCRETIONARY SPENDING Eliminate Corporate Welfare Within the Department of Com- merce. Business subsidies distort the economy, impose unfair bur- dens on taxpayers, and are especially problematic given the fiscal problems facing the U.S. Government. With potential savings of roughly $6.9 billion over 10 years, programs that should be consid-tjames on DSK6SPTVN1PROD with REPORTS ered for elimination include the following: VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00078 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 71 • The Hollings Manufacturing Extension Program, which sub- sidizes a network of nonprofit extension centers that provide tech- nical, financial and marketing services for small and medium-size businesses that are largely available in the private market. The program already obtains two-thirds of its funding from non-Federal sources, and was originally intended to be self-supporting. • Trade Promotion Activities at the International Trade Admin- istration [ITA]. This agency, within the Department of Commerce, provides trade promotion services for U.S. companies. The fees it charges for these services do not cover the cost of these activities. Businesses can obtain similar services from State and local govern- ments and the private market. The ITA should be eliminated or charge for the full cost of these services. Tighten the Belts of Government Agencies. Duplication, hidden subsidies, and large bureaucracies are symptomatic of many agen- cies within Function 370. Among them are the following: • The General Services Administration’s [GSA] Federal Citizen Services Fund. This fund is the e-mail, print, and telephone infor- mation service of the GSA, managing websites for the general pub- lic such as USA.gov. Many of its responsibilities, however, dupli- cate those of other offices within the GSA, including the Electronic Government Fund. In light of cutbacks in various government agencies, this resolution supports rationalizing the GSA wherever possible. As an agency whose mission is to provide services to other parts of the government, the GSA stretches across many budget functions: It has 6,900 full-time employees; owns or leases about 9,600 buildings and related assets; and has a budget of more than $960 million, an increase of 220 percent since 2008. • The Small Business Administration [SBA]. The SBA provides almost $60 million in grants, hidden in its discretionary salaries and expenses budget, which could be canceled. • The Securities and Exchange Commission [SEC]. In 2011, the SEC spent more than $1.2 billion on salaries and expenses, with $760 million going to compensation and benefits alone. More than 3,800 full-time employees occupied the SEC at the end of 2011, with an average compensation and benefits package of about $198,000 per employee. The SEC’s budget has swollen by 34 per- cent since 2008. The President’s budget requests $1.6 billion in 2013, an increase of 73 percent from 2008 levels. On top of this, the Dodd-Frank Wall Street Reform and Consumer Protection Act [Dodd-Frank] requests doubling the size of the SECs budget from current levels, increasing it to $2.25 billion in fiscal year 2015. In its 2013 Views and Estimates, the House Committee on Finan- cial Services notes the regulatory failures of the SEC leading up to the financial crisis: In the run-up to the financial crisis, the SEC repeatedly failed to fulfill any part of its mission: the SEC failed to adequately supervise the Nation’s largest investment banks, which resulted in the bailout of Bear Stearns and the collapse of Lehman Brothers and the ensuing financial panic; the SEC failed to supervise the credit rating agen- cies that bestowed AAA ratings on securities that later proved to be no better than junk; and the SEC failed to en-tjames on DSK6SPTVN1PROD with REPORTS sure that issuers made adequate disclosures to investors VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00079 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 72 about securities cobbled together from poorly underwritten mortgages that were bound to fail. Apart from these fail- ures, the SEC’s inability to detect the Madoff and Stanford Ponzi schemes cast further doubt on its ability to protect investors. The Government Accountability Office [GAO] issued a report in 2010 in which it identified material weaknesses in the SEC’s con- trols. It demonstrated deficiencies in the SEC’s reporting of finan- cials, budgetary resources, and other internal controls. While the administration requests expanding the SEC’s budget, this resolution questions the premise that more funding for the SEC means better, smarter regulation. It denies the claim that adding reams of regulations to the books and scores of regulators to the payrolls will provide greater transparency, consumer protec- tion, and enforcement for increasingly complex markets. At a time when trimming the deficit is imperative, the SEC should create headroom in its budget by streamlining and making more efficient its operations and resources; defraying taxpayer expenses by desig- nating self-regulatory organizations (subject to SEC oversight) to perform needed examinations of investment advisors; and enhanc- ing collaboration with other agencies, such as the Commodity Fu- tures Trading Commission, to reduce duplication, waste, and over- lap in supervision. Ultimately, the committees of jurisdiction will establish the specific policies. MANDATORY SPENDING Terminate Grants to Worsted Wool Manufacturers and Payments to Wool Manufacturers. The Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law 108–429) established the Wool Apparel Manufacturers Trust Fund. This fund authorizes the De- partment of Commerce to provide grants to certain manufacturers of worsted wool products to ease adjustment to changes in trade law. The grants, originally slated to end in 2007, still exist and have been extended until 2014. Termination of this temporary grant program is overdue. This Act also directs Customs to make payments to wool manufacturers from certain duties collected to provide import tax relief. This account has been extended twice through amendments and has also outlived its original purpose. Terminate Corporation for Travel Promotion. In 2010, the Con- gress established a new annual payment to the travel industry and created a new government agency, the Corporation for Travel Pro- motion (now called Brand USA), to conduct advertising campaigns encouraging foreign travelers to visit the United States. This budg- et recommends ending these subsidies and eliminating the new agency because it is not a core responsibility of the Federal Govern- ment to pay for and conduct advertising campaigns for a certain in- dustry. Moreover, the travel industry can and should pay for the advertising that it benefits from. Restrict New FDIC Authority to Bail Out Bank Creditors. This budget proposes to preempt the cycle of future bailouts set in mo- tion by Dodd-Frank. This financial regulatory overhaul is not reform. It expands andtjames on DSK6SPTVN1PROD with REPORTS centralizes power in Washington, doubling down on the root causes VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00080 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 73 of the 2008 crisis. It contains layer upon layer of new bureaucracy sewn together by complex regulations, yet it fails to address key problems, such as Fannie Mae and Freddie Mac, that contributed to the worst financial meltdown in recent history. Although the bill is dubbed ‘‘Wall Street Reform,’’ it actually intensifies the problem of too-big-to-fail by giving large, interconnected financial institu- tions advantages that small firms will not enjoy. While the proponents of Dodd-Frank went to great lengths to de- nounce bailouts, this law only sustains them. The Federal Deposit Insurance Corporation [FDIC] now has the authority to access tax- payer dollars in order to bail out the creditors of large, ‘‘system- ically significant’’ financial institutions. CBO estimates the cost for this new authority at $26 billion, although CBO Director Elmen- dorf has testified that ‘‘the cost of the program will depend on fu- ture economic and financial events that are inherently unpredict- able.’’ In other words, another large-scale financial crisis in which creditors are guaranteed government bailouts could cost much, much more. This resolution calls for ending this regime, now enshrined into law, which paves the way for future bailouts. House Republicans put forth an enhanced bankruptcy alternative that—instead of re- warding corporate failure with taxpayer dollars—would place the responsibility of large, failing firms in the hands of the share- holders who own them, the managers who run them, and the credi- tors who finance them. This resolution also supports cancelling the ability of the Bureau of Consumer Financial Protection (created by Dodd-Frank) to fund its operations by spending from the Federal Reserve’s yearly remit- tances to the Treasury Department. The bill was written to provide off-budget financing for the new Bureau, which will be housed at the Federal Reserve but have complete autonomy from the Fed. To preserve its independence as the Nation’s monetary authority, the Federal Reserve is off-budget and its excess earnings from mone- tary operations are returned to the Treasury to reduce the deficit. Now, instead of directing these remittances to reduce the deficit, Dodd-Frank requires diverting a portion of them to pay for a new bureaucracy with the authority to write far-reaching rules on fi- nancial products and restrict credit to the very customers it seeks to ‘‘protect.’’ Privatize the Business of Government-Controlled Mortgage Giants Fannie Mae and Freddie Mac. Since being placed into government conservatorship in 2008, Fannie Mae and Freddie Mac, absent major reforms, are expected to have an all-in cost to taxpayers of more than $335 billion through 2022, according to CBO estimates. This includes losses on preexisting commitments—those entered into prior to conservatorship—of about $248 billion. CBO has re- corded Fannie and Freddie as explicit financial components of the Federal budget, accounting for their liabilities as liabilities of the government. In contrast, the administration does not fully account for taxpayer exposure to Fannie and Freddie and leaves them off budget instead. So far, Treasury has bailed out Fannie and Freddie to the tunetjames on DSK6SPTVN1PROD with REPORTS of $180 billion. Fannie Mae, Freddie Mac, and FHA now dominate VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00081 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 74 97 percent of the market for the issuance of new mortgage-backed securities. This budget recommends putting an end to corporate subsidies and taxpayer bailouts in housing finance. It envisions the eventual elimination of Fannie Mae and Freddie Mac, winding down their government guarantee and ending taxpayer subsidies. In the in- terim, it supports removing distortions to allow an influx of private capital and advancing various measures that would bring trans- parency and accountability to these two government-sponsored en- terprises. Reform the Credit Reform Act to Incorporate Fair-Value Account- ing Principles. As the bailouts of Fannie and Freddie continue, an- other bailout to a housing giant looms. The market share of the FHA has exploded in recent years, crowding out private sector in- vestment by 70 percent since 2007. Accompanying this rise in mar- ket share has been a reduction in the capital ratio of the FHA’s Mutual Mortgage Insurance [MMI] Fund to levels far below the Fund’s congressionally-mandated ratio of 2 percent. Should the capital ratio fall below zero, yet another taxpayer bailout of a hous- ing finance giant will be automatically triggered. Given the precarious financial position of the FHA, the govern- ment should adopt measures to discourage shifting of taxpayer risk to the FHA and other government-backed entities as Fannie and Freddie are wound down. Right now, there are notable differences between the accounting treatment of FHA-insured loans and Fannie- and Freddie-guaranteed loans. FHA’s MMI loans are scored according to the Federal Credit Re- form Act of 1990, which determines budgetary cost by calculating the net present value of the cash flows associated with loans and discounting those flows using risk-free marketable Treasury secu- rity rates. By contrast, CBO uses fair-value scoring for Fannie Mae- and Freddie Mac-guaranteed loans. Fair-value scoring recog- nizes that adverse economic events such as market downturns can cause loan defaults to rise, thus it reflects the full financial risk in- curred by the taxpayer of backing these loans. In other words, the current budgetary treatment of FHA loans understates the full costs associated with them, thus it encourages policymakers to shift risk from Fannie and Freddie to FHA. This resolution authorizes the use of fair-value scoring for Fed- eral credit programs. Without it, the full risk of FHA loans—effec- tively borne by taxpayers—cannot be properly accounted for in the budget. As the government reforms its role in the U.S. housing markets, which this resolution supports, Fannie, Freddie and FHA loans should be treated with parity and full transparency on the budget. The housing-finance system of the future, however, will allow pri- vate-market secondary lenders to fairly, freely, and transparently compete, with the knowledge that they will ultimately bear appro- priate risk for the loans they guarantee. Their viability will be de- termined by the soundness of their practices and the value of their services.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00082 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 75 OFF-BUDGET MANDATORY SPENDING Reform the Postal Service. The United States Postal Service [USPS] is unable to meet its financial obligations and in desperate need of structural reforms. The budget recommends giving the Postal Service the flexibility that any business needs to respond to changing market conditions, including declining mail volume, which is down more than 20 percent since 2006. This budget also recognizes the need to reform compensation of postal employees. The House Oversight and Government Reform Committee reported legislation, the Postal Reform Act of 2011, which recommends lowering the Postal Service’s share of employee health and life insurance premiums. Currently, USPS pays 79 per- cent of the health insurance premiums and 100 percent of the life insurance premiums for the majority of its employees. As a result, these employees are paying a smaller share of the costs of their health and life insurance premiums than other Federal employees. The Postal Reform Act reforms compensation by requiring that USPS employees contribute at least as much as other Federal em- ployees to their health and life insurance premiums. Taken together, these reforms could potentially allow the Postal Service to save $25.7 billion over 10 years and help restore it to solvency.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00083 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
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  • FUNCTION 400: TRANSPORTATION Function Summary Transportation infrastructure is a vital component of the U.S. economy, but the funding mechanisms for Federal highway and transit spending have become distorted, leading to imprudent, irre- sponsible, and sometimes downright wasteful spending. Further, however worthy some transportation projects might be, their capac- ity as job creators has been vastly oversold, as demonstrated by the extravagant but unfulfilled promises that accompanied the 2009 ‘‘stimulus’’ bill. Spending in the function has increased over 30 per- cent since the start of the administration. This budget category includes ground, air, water and other trans- portation funding. The major agencies and programs here include the Department of Transportation (including the Federal Aviation Administration [FAA]; the Federal Highway Administration; the Federal Transit Administration; highway, motor carrier, rail and pipeline safety programs; and the Maritime Administration); the Department of Homeland Security (including the Federal Air Mar- shals, the Transportation Security Administration, and the U.S. Coast Guard); the aeronautical activities of the National Aero- nautics and Space Administration [NASA]; and the National Rail- road Passenger Corporation [Amtrak]. Summary of Committee-Reported Resolution The resolution calls for $57.1 billion in budget authority and $49.7 billion in outlays in fiscal year 2013. Discretionary budget authority in 2013 is $30.2 billion, with outlays of $47.9 billion; and mandatory spending is $26.9 billion in budget authority and $1.9 billion in outlays. The large discrepancies between budget author- ity and outlays here results from the split treatment of the trans- portation trust funds, such as the Highway Trust Fund, through which funding is provided as a type of mandatory budget authority; and outlays, which are controlled by annual limitations on obliga- tions set in appropriations acts. Over 10 years, budget authority to- tals $787.7 billion, with outlays of $789 billion. Illustrative Policy Options The budget supports maintaining essential funding for highways, aviation and safety, offset by reductions in other transportation ac- tivities of lower priority to the Federal Government. As is true else- where, actual policy decisions will be determined by the committees of jurisdiction. Nevertheless, the options below suggest one set of policies that can help meet the budget’s levels.tjames on DSK6SPTVN1PROD with REPORTS (77) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00085 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 78 DISCRETIONARY SPENDING Eliminate Funding for High-Speed Rail. High-speed rail projects and any new intercity rail projects should be pursued only if they can be established as self-supporting commercial services. The threat of large, endless subsidies is precisely the reason governors across the country are rejecting federally funded high-speed rail projects. There are only two high-speed rail lines in the world that break even: one in Europe and one in Japan. Both are in areas that have unusually high population densities and extremely high gaso- line prices. Terminate and reform spending on ineffective, wasteful subsidies and underperforming programs. The budget includes reductions for terminating the New Starts and Small Starts programs within the Department of Transportation. The benefits of these mass transit projects are local, not national. They should be funded at the local level. The budget supports continued reforms for Amtrak—includ- ing requiring overtime limits for Amtrak employees—and reduc- tions in headquarters and administrative costs for agencies. MANDATORY SPENDING Avert the Bankruptcy of the Highway Trust Fund. The budget recognizes that the Highway Trust Fund is projected by CBO to go bankrupt in the spring of 2013. By current law and practice, the Department of Transportation would need to reduce spending im- mediately upon the exhaustion of trust fund balances. Congress needs to reform this critically important program to put it on a sound financial footing—without further bailouts using borrowed money. The budget recommends sensible reforms to avert the bank- ruptcy of the Highway Trust Fund by aligning spending from the Trust Fund with incoming gas revenues collected. The budget also includes additional provisions to: (1) assume a new potential fund- ing stream in the form of oil and gas revenues; (2) allow flexibility for a transportation reauthorization so long as the legislation does not increase the deficit and is fully offset (such an authorization is currently being discussed in both the House and the Senate); and (3) plug a loophole in the budget that ensures any future general fund transfer will be fully offset. Simplify the Fee Structure and Help Offset Costs in Aviation Se- curity. Taxpayers currently subsidize more than half the cost of aviation security for the travelers who use and directly benefit from the system. This burden could be eased by shifting greater respon- sibility to these beneficiaries. One way to do so would be by apply- ing a simple flat fee of $5 per one-way trip for security system users, instead of a $2.50 fee for a one-way trip with no stops and a $5 fee for a trip with one or more stops. Reducing Subsidies for Pilot Registration and Licensing Fees for the FAA. The FAA regulates the registration of aircraft and the li- censing and certification of pilots. Currently, taxpayers subsidize aircraft owners and operators because there is no charge for some of these licenses, while others are issued below cost. The costs fortjames on DSK6SPTVN1PROD with REPORTS these services should be borne by those who benefit from them. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00086 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 79 Terminate the Ocean Freight Differential Program for Food Aid. Current law requires the Department of Transportation to reim- burse other Federal agencies for the extra costs the agencies pay because of legal requirements that food aid be shipped on U.S. ships. The budget exempts food aid from this required reimburse- ment, which needlessly adds to taxpayer cost for these humani- tarian missions.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00087 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT Function Summary This category includes programs that provide Federal funding for economic and community development in both urban and rural areas, including: Community Development Block Grants [CDBGs]; the non-power activities of the Tennessee Valley Authority; the re- gional commissions, including the Appalachian Regional Commis- sion; the Economic Development Administration [EDA]; and partial funding for the Bureau of Indian Affairs. Homeland Security spending in this function includes the State and local government grant programs of the Department of Home- land Security, including partial funding for the Federal Emergency Management Agency [FEMA]. Aside from those programs related to emergency preparedness and critical needs, this resolution supports streamlining non-essen- tial community and regional initiatives that are not core functions of the Federal Government. Summary of Committee-Reported Resolution The resolution calls for $11 billion in budget authority and $21.7 billion in outlays in fiscal year 2013. Discretionary budget author- ity in 2013 is $10.9 billion, with $19.9 billion in associated outlays. Mandatory spending in 2013 is $120 million in budget authority and $1.9 billion in outlays. The 10-year totals for budget authority and outlays are $78.3 billion and $111.2 billion, respectively. The large gap between budget authority and outlays in the func- tion totals and discretionary levels results mainly from the spend- ing out of budget authority provided in the stimulus bill. Illustrative Policy Options As elsewhere, the committees of jurisdiction will make final pol- icy determinations. The proposals below indicate policy options that might be considered. DISCRETIONARY SPENDING Eliminate Non-Core Programs. At a time when shrinking spend- ing is imperative for the government’s fiscal well-being, this resolu- tion recommends taking a hard look at community and regional programs; focusing on those that deliver funds for non-core Federal Government functions; and consolidating and streamlining pro- grams wherever possible. Among programs that should be consid- ered in this review are the following:tjames on DSK6SPTVN1PROD with REPORTS (81) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00089 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 82 The Community Development Fund [CDF]. Historically, about 80 to 90 percent of funding for the CDF is spent on the Community Development Block Grant [CDBG]. CDBG is an annual formula grant directed to State and local governments to address a broad array of initiatives. In 2012, $2.9 billion was appropriated for CDBG. Currently, there is no maximum community poverty rate to be eligible for funds, nor is there an exclusion for communities with high average income. Federal Emergency Management Agency Reforms. The budget supports FEMA reforms advocated in the House, including improv- ing efficiencies in state and local programs. The budget also sup- ports efforts in the FEMA authorization this year to incorporate initiatives such as improved cost-estimating and efforts to help states and localities use existing resources to help communities re- cover from disasters expeditiously and cost-effectively. The budget also acknowledges the need to look at reforms in dis- aster-relief assistance to ensure that those state and local govern- ments most in need are receiving the assistance required. The cur- rent administration has issued a total of 2,213 disaster declara- tions—66 percent of all FEMA disaster declarations since 1953 in the span of three years alone.6 According to the Government Ac- countability Office [GAO], this is part of a broader trend.7 From 2002 to 2011, presidents have declared 35 percent more disasters than they did during the preceding decade. The disaster declara- tion is intended as a process to help state and local governments receive Federal assistance when the severity and magnitude of the disaster exceeds state and local resources, and when Federal assist- ance is absolutely necessary. When disaster-relief decisions are not made judiciously, limited resources are diverted away from commu- nities that are truly in need. The budget supports GAO recommendations and takes a closer look at: (1) reducing Federal expenditures by updating disaster dec- laration eligibility indicators, like per capita thresholds and other major disaster metrics, by (for example) adjusting for inflation; and (2) providing more scrutiny on cost-share levels and waivers. For example, preparedness programs like the Emergency Management Performance Grants have shown greater buy-in by state and local governments; demonstrated better performance in delivering re- sources to first responders; and ensured efficient and effective re- sponse operations. These types of reforms will increase trans- parency in the way that disaster declaration decisions are made and in accurately measuring a state’s capacity to respond to a dis- aster. MANDATORY SPENDING Reform the National Flood Insurance Program [NFIP]. This pro- gram, administered by FEMA, provides subsidized and unsub- sidized flood insurance to the private sector and seeks to provide an alternative to disaster assistance by reducing the damage done to property by flooding. While collections from policyholders should 6 Matt Mayer, ‘‘Congress Should Limit the Presidential Abuse of FEMA’’, Heritage Founda- tion, January 2012.tjames on DSK6SPTVN1PROD with REPORTS 7 ‘‘2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance Revenue,’’ Government Accountability Office, February 2012. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00090 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 83 cover the costs associated with flood insurance activities, the NFIP owes a debt of $17.8 billion to the Treasury, on which it must also pay debt service. Most of this debt accumulated during the hurri- cane season of 2005. Currently, 20 percent of NFIP policies are subsidized. On average, taking into account subsidized and unsub- sidized policies under NFIP, premium collections cover only 35 to 40 percent of the actuarial value of the insurance. NFIP, like many other government programs, was designed as a temporary incentive for homeowners who were unaware of their flood risks (before flood-mapping began in 1975) to purchase flood insurance. At present, however, homeowners can receive NFIP sub- sidies for new purchases of existing properties with high-flood risk (even though flood mapping occurred decades ago), including for second and vacation homes, and for properties that realize repeated losses from flood damage. The budget supports the House-passed bill, H.R. 1309, to protect taxpayers from excessive and unwar- ranted exposure, implement these reforms to strengthen the NFIP’s financial position, level the playing field for private insurers to enter the market, and sustain the Fund’s ability to make good on future claims. Reduce energy subsidies for commercial interests. The budget re- duces spending for rural green energy loan guarantees. These loan guarantees come with Federal mandates that channel private in- vestments into financing the administration’s preferred renewable energy and energy efficiency interests at taxpayers’ expense.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00091 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES Function Summary One of the key drivers of strong economic growth is a well- trained and educated workforce. As the U.S. economy becomes more complex in the face of globalization and technological ad- vances, it is vital that workers have the ability to pursue effective life-long learning. While Federal spending on the Department of Education and related education programs has grown significantly over the past few decades, academic achievement has not seen a commensurate improvement. Now more than ever, the Nation’s students must have the oppor- tunity to access the high-quality education and skills-training need- ed to enable the workforce to compete in the rapidly changing glob- al economy. At the same time, Congress must make every dollar count by eliminating wasteful, duplicative, and ineffective pro- grams. In March 2011, the U.S. Government Accountability Office [GAO] identified many areas that are ripe for reform. In the area of education, their report identified 82 separate programs designed to improve teacher quality across 10 Federal agencies, and dozens of overlapping job training programs. Reforms in these areas are reflected in Function 500, which cov- ers Federal spending primarily in the Departments of Education, Labor, and Health and Human Services for programs that directly provide—or assist States and localities in providing—services to young people and adults. Activities reflected here provide develop- mental services to low-income children; help fund programs for dis- advantaged and other elementary and secondary school students; make grants and loans to post-secondary students; and fund job- training and employment services for people of all ages. Summary of Committee-Reported Resolution The resolution provides $57.6 billion in budget authority and $78.3 billion in outlays in fiscal year 2013. In that year, discre- tionary spending is $91.5 billion in budget authority and $93.6 bil- lion in outlays; mandatory spending in 2013 is ¥$33.9 billion in budget authority and ¥$15.3 billion in outlays. Over 10 years, spending in this function totals $771.8 billion in budget authority and $799.3 billion in outlays. The large gap between budget authority and outlays in the func- tion totals and discretionary levels results mainly from prior-year outlays from the stimulus bill. The negative mandatory numbers are due to the direct lending program, in which the Education De- partment acts effectively as a bank making student loans. How-tjames on DSK6SPTVN1PROD with REPORTS (85) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00093 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 86 ever, for reasons addressed later in this section, these projected fu- ture savings are somewhat misleading because they fail to account for the market risk of the loans. While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set pri- orities and achieve efficiencies, it does not take the arbitrary ap- proach that will result from the Budget Control Act’s sequester. The House Republican budget replaces the sequester. If not re- placed, based on staff estimates, this function would be reduced by another $9.0 billion below the committee recommendation in fiscal year 2013. Illustrative Policy Options The committees of jurisdiction will make final policy determina- tions, but options worthy of consideration include the following. DISCRETIONARY SPENDING Reform Job Training Programs. Federal job training programs are balkanized, difficult to access, and lacking in accountability. There are at least 49 job training programs spread across nine dif- ferent agencies. In January 2011, the Government Accountability Office [GAO] issued a report that found almost all federal employ- ment and training programs overlap with at least one other pro- gram, providing similar services to similar populations. Together, these programs spent $18 billion in fiscal year 2009, including stimulus dollars, and at least $14.5 billion in fiscal year 2010. Ad- ditionally, Senator Coburn has presented a report highlighting the high amount of waste, fraud, and abuse that occurs in these pro- grams. All congressional committees with jurisdiction over job training programs should look to consolidate as many administrative struc- tures as possible to eliminate duplication and maximize taxpayer funds by focusing them on the most effective means of delivering job training activities. The Education and the Workforce Com- mittee, for instance, recently introduced legislation to that end. This budget improves accountability by calling for the consolida- tion of duplicative federal job-training programs into more account- able, targeted career scholarship programs. A streamlined ap- proach with increased oversight and accountability will not only provide administrative savings, but improve access, choice, and flexibility to enable workers and job seekers to respond quickly and effectively to whatever specific career challenges they face. Make the Pell Grant Program Sustainable. Pell Grants are the perfect example of promises that cannot be kept. The program is on an unsustainable path, a fact acknowledged by the President’s own fiscal year 2013 budget. The College Cost Reduction and Ac- cess Act of 2007 [CCRAA], the Higher Education Opportunity Act of 2008 [HEOA], the ‘‘stimulus’’ bill, and the Student Aid and Fis- cal Responsibility Act of 2010 [SAFRA] all made Pell Grants more generous than the Federal budget could afford. This, along with a dramatic rise in the number of eligible students due to the reces- sion, has caused program costs to more than double since 2008,tjames on DSK6SPTVN1PROD with REPORTS from $16.1 billion in 2008 to an estimated $36.4 billion in fiscal VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00094 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 87 year 2013. Moreover, the program is beginning to increasingly rely on mandatory funding to solve its discretionary shortfalls. For in- stance, the Department of Education warned in 2012 that without changes to reduce program costs, Pell Grants would have an ending shortfall of $20.4 billion. Instead of making necessary reforms, Congress again resorted to short-term funding patches—a temporary answer that will not pre- vent another severe funding cliff for the program in the future. The President has increased the maximum Pell Grant by more than $900 since 2008, to $5,635 for the 2013–2014 award year. However, his budget only provides funding for that level of award through the 2014–2015 academic year. This irresponsible spending serves only to put the program at greater risk of ultimately being unable to fulfill its promises to students. Urgent reforms are necessary to enable the program to continue as the foundation of the Nation’s commitment to helping low-in- come students gain access to higher education. The budget rec- ommends the following: • Roll back certain recent expansions to the needs analysis to en- sure aid is targeted to the truly needy. The Department of Edu- cation attributes 14 percent of program growth since 2008 to recent legislative expansions to the needs analysis formula. The biggest cost drivers come from changes made in the College Cost Reduction and Access Act of 2007 [CCRAA], such as the expansions of the level at which a student qualifies for an automatic zero ‘‘Expected Family Contribution’’ [EFC] and the income protection allowance. These should be returned to pre-CCRAA levels. • Eliminate administrative fees paid to participating institu- tions. The government pays participating schools $5 per grant to administer and distribute Pell awards. Schools already benefit sig- nificantly from the Pell program because the aid makes attendance at those schools more affordable. • Consider a maximum income cap. Currently there is no fixed upper-income limit for a student to qualify for Pell. Figures are simply plugged into a formula to calculate the amount for which the student qualifies. The higher the income level of the student and the student’s family, the smaller grant they receive. • Eliminate eligibility for less-than-half-time students. Funding should be reserved for students with a larger commitment to their education. • Adopt a sustainable maximum award level. The Department of Education attributed 25 percent of recent program growth to the $619 increase in the maximum award done in the stimulus bill that took effect in the 2009–10 academic year. To get program costs back to a sustainable level, the budget recommends a maximum award of $5,550. This award would be fully funded through discre- tionary spending. Encourage Policies That Promote Innovation. Federal interven- tion in higher education should increasingly be focused not solely on financial aid, but on policies that maximize innovation and en- sure a robust menu of institutional options from which students and their families are able to choose. Such policies should include reexamining the data made available to students to make certaintjames on DSK6SPTVN1PROD with REPORTS they are armed with information that will assist them in making VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00095 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 88 their postsecondary decisions. Additionally, the Federal Govern- ment should act to remove regulatory barriers in higher education that act to restrict flexibility and innovative teaching, particularly as it relates to non-traditional models such as online coursework. Eliminate Ineffective and Duplicative Federal Education Pro- grams. The current structure for K–12 programs at the Depart- ment of Education is fragmented and ineffective. Moreover, many programs are duplicative or are highly restricted, serving only a small number of students. Given the budget constraints, Congress must focus resources on programs that truly help students. The budget calls for reorganization and streamlining of K–12 programs and anticipates major reforms to the Elementary and Secondary Education Act [ESEA], which was last reauthorized as part of the No Child Left Behind Act [NCLB]. The budget would terminate and reduce programs that are failing to improve student achieve- ment. It also recommends that the committees of jurisdiction ad- dress the duplication among the 82 programs that are designed to improve teacher quality. Encourage Private Funding for Cultural Agencies. Federal sub- sidies for the National Endowment for the Arts, the National En- dowment for the Humanities, and the Corporation for Public Broadcasting can no longer be justified. The activities and content funded by these agencies go beyond the core mission of the Federal Government and they are generally enjoyed by people of higher in- come levels, making them a wealth transfer from poorer to wealthi- er citizens. These agencies can raise funds from private-sector pa- trons, which will also free them from any risk of political inter- ference. Eliminate the Corporation for National and Community Service. Programs administered out of this agency—which created the oxymoron ‘‘paid volunteer’’—provide funding to students and others who work in certain areas of public service. Participation in these programs is not based on need. The Federal Government already has aid programs focused on low-income students, and paying vol- unteers is not a core Federal responsibility, especially in times of high deficits and debt. Further, it is much more efficient to have such efforts operate at the State and local level by the community that receives the benefit of the service. Eliminate Administrative Fees Paid to Schools in the Campus- Based Student Aid Programs. Under current law, participating higher education institutions are allowed to use 5 percent of Fed- eral program funds for administrative purposes. The budget rec- ommends prohibiting these funds from being used for administra- tive costs. Schools already benefit significantly from participating in federal student aid programs. Terminate the Safe and Drug-Free Schools Program. This pro- gram funds grants to reduce youth substance abuse. Program eval- uations have repeatedly found the program to be ineffective. Promote State, Local, and Private Funding for Museums and Li- braries. The Federal Institute of Museum and Library Services is an independent agency that makes grants to museums and librar- ies. This is not a core Federal responsibility. This function can be funded at the State and local level and augmented significantly bytjames on DSK6SPTVN1PROD with REPORTS charitable contributions from the private sector. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00096 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 89 MANDATORY SPENDING Repeal New Funding From the Student Aid and Fiscal Responsi- bility Act of 2010 [SAFRA]. During the debate on SAFRA, the Con- gressional Budget Office provided estimates showing that projected future savings from a government takeover of all Federal student loans decreased dramatically when ‘‘market risk’’ was taken into account. Since that time, the President’s National Commission on Fiscal Responsibility and the Pew-Peterson Commission on Budget Reform have recommended the incorporation of fair-value account- ing for all Federal loan and loan guarantee programs to enable a true assessment of their cost to taxpayers. And earlier this year the House passed H.R. 3581, the Budget and Accounting Transparency Act of 2011, which would mandate fair-value accounting. Unfortu- nately, SAFRA used the higher non-adjusted savings projection to subsidize the new health care law and to increase spending on sev- eral education programs. Although much of the funding allocations have already been spent, Congress could cancel the future spending in the following ways: • First, it could repeal the expansion of the Income-Based Repay- ment [IBR] program. SAFRA made more generous the IBR plan for new borrowers of Direct Loans. This program, created by the CCRAA, is still relatively new. Congress should ensure the pro- gram is meeting its intended goals before it is expanded. • Second, Congress could repeal the new mandatory College Ac- cess Challenge Grants. SAFRA dedicated $750 million in manda- tory spending to this discretionary program and created a ‘‘funding cliff’’ with resources abruptly terminating in 2014. • Third, it could make discretionary payments, rather than man- datory payments, to non-profit servicers. SAFRA established two separate funding categories for Direct Loan servicing contracts, a mandatory stream for eligible non-profit services and a discre- tionary stream for other servicers. Both of these types of servicers should be funded with discretionary funds. • Fourth, it could move funding for the Community College/TAA grant program to the discretionary side of the budget. SAFRA pro- vides an additional $500 million in mandatory funding per year for fiscal years 2011–14 for the Trade Adjustment Assistance [TAA] Community College and Career Training program—a competitive grant program administered by the Department of Labor. This is a discretionary program that should not be funded with mandatory funds. Accept the Fiscal Commission’s Proposal To Eliminate In-School Interest Subsidies for Undergraduate Students. The Federal Gov- ernment focuses aid decisions on family income prior to a student’s enrollment, and then provides a number of repayment protections and, in some cases, loan forgiveness after graduation. There is no evidence that in-school interest subsidies are critical to individual matriculation. Terminate the Duplicative Social Services Block Grant. The So- cial Services Block Grant is an annual payment sent to States without a matching requirement to help achieve a range of social goals, including child care, health services, and employment serv-tjames on DSK6SPTVN1PROD with REPORTS ices. Most of these are also funded by other Federal programs. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00097 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 90 States are given wide discretion to determine how to spend this money and are not required to demonstrate the outcomes of this spending, so there is no evidence of its effectiveness. The budget recommends eliminating this duplicative spending.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00098 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • FUNCTION 550: HEALTH Function Summary The principal driver of spending in this function is Medicaid, the Federal-State low-income health program. It represents more than 70 percent of the function total, and is growing at a rate of 5 per- cent per year—far faster than the growth of the overall economy. The Congressional Budget Office [CBO] projects federal spending on this program to be $258 billion in fiscal year 2012. This is ex- pected to more than double within the next 10 years, reaching $622 billion by fiscal year 2022. But this represents only the Federal share of Medicaid. State spending on the program is expected to follow these same trends. According to the Centers for Medicare and Medicaid Services’ De- cember 2010 Actuarial Report on the Financial Outlook on Med- icaid, total State spending will rise from $133.5 billion in 2010 to $327.6 billion in 2019. While these spending trends are clearly unsustainable, Medicaid also has fostered a two-tiered hierarchy in the health care market- place that stigmatizes Medicaid enrollees. Its perverse funding structure is exacerbating budget pressures at the State and Fed- eral level, while creating a mountain of waste. With administrators looking to control costs and providers refusing to participate in a system that severely under-reimburses their services, Medicaid beneficiaries are ultimately finding it increasingly difficult to ob- tain even the most basic medical care. Absent reform, Medicaid will not be able to deliver on its promise to provide a sturdy health-care safety net for society’s most vulnerable. Medicaid’s current structure gives States a perverse incentive to expand the program and little incentive to save. For every dollar that a State government spends on Medicaid, the Federal Govern- ment pays an average of 57 cents. Expanding Medicaid coverage during boom years is tempting and easy to do—State governments pay less than half the cost. Yet to restrain Medicaid’s growth, States must rescind a dollar’s worth of coverage to save 43 cents. The recently enacted health care law adds even more liabilities to an already unsustainable program. CBO estimates the new law will increase Federal Medicaid spending by $931 billion. This is due to the millions of new beneficiaries that the law drives into the program. In fact, CBO estimates that over the next 10 years, no fewer than 30 million new enrollees will be added the Medicaid program. For all these reasons, this budget recommends a fundamental re- form of the Medicaid Program. One potential approach is described below.tjames on DSK6SPTVN1PROD with REPORTS (91) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00099 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 92 In addition to Medicaid, this budget function includes spending for the State Children’s Health Insurance Program [SCHIP], health research and training, including the National Institutes of Health [NIH] and substance abuse prevention and treatment; and con- sumer and occupational health and safety, including the Occupa- tional Safety and Health Administration. Discretionary spending in this function includes funding for Project Bioshield, NIH, the Food Safety and Inspection Service, and the Food and Drug Administration. Summary of Committee-Reported Resolution The resolution calls for $363.3 billion in budget authority and $365.5 billion in outlays in fiscal year 2013. Discretionary spending for the year is $56.6 billion in budget authority and $58.2 billion in outlays; mandatory spending is $306.7 billion in budget author- ity and $307.3 billion in outlays. The 10-year totals for budget au- thority and outlays are $4.05 trillion and $4.04 trillion, respec- tively. While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set pri- orities and achieve efficiencies, it does not take the arbitrary ap- proach that will result from the Budget Control Act’s sequester. The House Republican budget replaces the sequester. If not re- placed, based on staff estimates, discretionary spending in this function would be reduced by another $6.5 billion below the com- mittee recommendation in fiscal year 2013. Illustrative Policy Options The exact contours of a Medicaid reform—as well as other poli- cies flowing from the fiscal assumptions in this budget resolution— will be determined by the committees of jurisdiction. Nevertheless, the need for fundamental Medicaid reform and other measures to slow the growth of Federal spending are unquestioned, and one set of potential approaches is described below. MANDATORY SPENDING Transform and Strengthen the Medicaid Safety Net. One way to secure the Medicaid benefit is by converting the Federal share of Medicaid spending into an allotment tailored to meet each State’s needs, indexed for inflation and population growth. Such a reform would end the misguided one-size-fits-all approach that has tied the hands of State governments. States would no longer be shack- led by federally determined program requirements and enrollment criteria. Instead, each State would have the freedom and flexibility and to tailor a Medicaid Program that fit the needs of its unique population. The Chairman’s mark proposes to turn Medicaid from an open- ended entitlement into a block-granted program like SCHIP. These programs would be unified under the proposal and grown together for population growth and inflation. This reform also would improve the health care safety net for low-income Americans by giving States the ability to offer theirtjames on DSK6SPTVN1PROD with REPORTS Medicaid populations more options and better access to care. Med- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00100 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 93 icaid recipients, like all other Americans, deserve to choose their own doctors and make their own health care decisions, instead of having Washington make those decisions for them. Based on this kind of reform, this budget assumes $810 billion in savings over 10 years, easing the fiscal burdens imposed on State budgets and contributing to the long-term stabilization of the Federal Government’s fiscal path. Repeal the Medicaid Expansions in the New Health Care Law. The recently enacted health care law calls for major expansions in the Medicaid program beginning in 2014. These expansions will have a significant impact on the Federal share of the Medicaid Pro- gram, and will dramatically increase outlays. In the face of enormous stress on Federal and State budgets and declining quality of care for Medicaid, the new health care law would increase the eligible population for the program by one-third. For fiscal years 2014 through 2023, CBO projects the new law will increase Federal spending by $932 billion. This future fiscal burden will have serious budgetary con- sequences for both Federal and State governments. While the health law requires the Federal Government to finance 100 percent of the Medicaid costs associated with covering new enrollees, this provision begins to phase out in fiscal year 2016. At that time, State governments will be required to assume a share of this cost. This share increases from fiscal year 2016 through 2020, when States will be required to finance 10 percent of the health law’s ex- pansion of Medicaid. Not only does this expansion magnify the challenges to both State and Federal budgets, it also binds the hands of local govern- ments in developing solutions that meet the unique needs of their citizens. The health care law would exacerbate the already crip- pling one-size-fits-all enrollment mandates that have resulted in below-market reimbursements, poor health care outcomes, and re- strictive services. The budget calls for repealing the Medicaid ex- pansions contained in the health care law and removing the law’s burdensome programmatic mandates on State governments. Adopt- ing this option would save $932 billion over 10 years. Repeal the Exchange Subsidies Created by the New Health Care Law. According to CBO estimates, the health law proposes to spend $800 billion over the next 10 years providing eligible individuals with subsidies to purchase government-approved health insurance. These subsidies can only be used to purchase plans that meet standards determined by the new health care law. In addition to this enormous market distortion, the law also stipulates a complex maze of eligibility and income tests to determine how much of a subsidy qualifying individuals may receive. The new law couples these subsidies with a mandate for individ- uals to purchase health insurance and bureaucratic controls on the types of insurance that may legally be offered. Taken together, these provisions will undermine the private insurance market, which serves as the backbone of the current U.S. health care sys- tem. Exchange subsidies will undermine the competitive forces of the marketplace. Government mandates will drive out all but the largest insurance companies. Punitive tax penalties will force indi-tjames on DSK6SPTVN1PROD with REPORTS viduals to purchase coverage whether they choose to or not. Fur- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00101 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 94 ther, this budget does not condone any policy that would require entities or individuals to finance activities make health decisions that violate their religious beliefs. This budget repeals the Presi- dent’s onerous health care law for this and many other reasons. Left in place, the health law will create pressures that will even- tually lead to a single-payer system in which the Federal Govern- ment determines how much health care Americans need and what kind of care they can receive. This budget recommends repealing the architecture of this new law, which puts heath care decisions into the hands of bureaucrats, and instead allowing Congress to pursue patient-centered health care reforms that actually bring down the cost of care by empowering consumers. For Function 550, repeal of the insurance subsidies and other ex- change-related spending would save roughly $640 billion over 10 years. To be clear, this budget repeals all federal spending related to the health law’s exchange subsidies and related spending. CBO’s $800 billion estimate for the spending associated with exchange subsidies combines a mix of both outlays and revenues. Function 550 reflects only the savings that would result from repealing the federal outlay portion of this spending. The remaining $160 billion in savings is associated with the revenues spent under the new law for premium credits. This budget assumes full repeal of all of the new health care law’s tax increases as part of comprehensive tax reform. Other Related Savings: Interactions from repealing unspent stim- ulus funding and other associated provisions in the new health care law save roughly $4 billion over 10 years. This is largely to do streamlining discretionary programs and promoting efficiencies within existing programs.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00102 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • FUNCTION 570: MEDICARE Function Summary With the creation of Medicare in 1965, the United States made a commitment to help fund the medical care of elderly Americans without exhausting their life savings or the assets and incomes of their working children and younger relatives. In urging the cre- ation of Medicare, President Kennedy said that such a program was chiefly needed to protect, not the poor, but people who had worked for years and suddenly found all their savings gone because of a costly health problem. But spending for Medicare has grown quickly in recent decades— in part because of rising enrollment and in part because of rising costs per enrollee—and has reached unsustainable rates. Between 1970 and 2011, gross federal spending for Medicare rose from 0.7 percent of GDP to 3.7 percent. Under the alternative fiscal scenario in CBO’s The Long-Term Budget Outlook (June 2011), mandatory spending on Medicare is projected to reach 7 percent of GDP by 2035 and 14 percent of GDP by 2085. CBO’s March baseline projects that Medicare’s Hospital Insurance Trust Fund will be bankrupt by 2022. Medicare’s imbalance threatens beneficiaries’ access to quality, affordable care. The program’s fundamentally flawed structure is driving up health care costs, which are, in turn, threatening to bankrupt the system—and ultimately the Nation. Without reform, the program will end up causing exactly what it was created to avoid: millions of America’s seniors without adequate health secu- rity and a younger working generation saddled with enormous debts to pay for spending levels that cannot be sustained. Letting government break its promises to current seniors and to future generations is unacceptable. In addition, placing Medicare on a sustainable path is an indispensable part of restoring the Fed- eral Government’s fiscal balance. The reforms outlined in this budget protect and preserve Medicare for those in or near retire- ment, while saving and strengthening the program so future gen- erations can count on it when they retire. The Medicare program’s spending appears in Function 570 of the budget resolution. The function reflects the Medicare Part A Hos- pital Insurance [HI] Program, Part B Supplementary Medical In- surance [SMI] Program, Part C Medicare Advantage Program, and Part D Prescription Drug Benefit, as well as premiums paid by qualified aged and disabled beneficiaries. The various parts of the program are financed in different ways. Part A benefits are financed primarily by a payroll tax (currently 2.9 percent of taxable earnings), the revenues from which are cred- ited to the HI Trust Fund. For Part B, premiums paid by bene-tjames on DSK6SPTVN1PROD with REPORTS (95) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00103 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 96 ficiaries cover about one-quarter of outlays, and the Treasury Gen- eral Fund covers the rest. (Payments to private insurance plans under Part C are financed by a blend of funds from Parts A and B.) Enrollees’ premiums under Part D are set to cover about one- quarter of the cost of the basic prescription drug benefit, although many low-income enrollees receive larger subsidies; general funds cover most of the remaining cost. Summary of Committee-Reported Resolution The resolution calls for $510 billion in budget authority and $510 billion in outlays in fiscal year 2013. Discretionary spending is $6.7 billion in budget authority and $6.6 billion in outlays in fiscal year 2013. Mandatory spending in 2013 is $503 billion in budget author- ity and $503 billion in outlays. The 10–year totals for budget au- thority and outlays are $6.5 trillion and $6.5 trillion respectively. Illustrative Policy Options The Medicare program attempts to do two things to make sure that all seniors have secure, affordable health coverage. First, the program pools risk among a specific population of Americans, en- suring that seniors enjoy secure access to coverage. The policies supported by this budget strengthen and enhance this aspect of Medicare so seniors will have more health-care choices within the same stabilized risk pool. Second, Medicare subsidizes coverage for seniors to ensure that coverage is affordable. Affordability is a critical goal, but the sub- sidy structure of Medicare is fundamentally broken and drives costs in the wrong direction. The open-ended, blank-check nature of the Medicare subsidy fuels health care inflation, threatens the solvency of the program, and creates inexcusable levels of waste in the system. While the committees of jurisdiction will make the final deter- minations on specific Medicare reforms, the options described below offer one clear and reliable path toward solvency. PREMIUM SUPPORT In the Medicare system, the Federal Government—not the pa- tient—is the customer; and the government has been a clumsy, in- effective steward of value. Controlling costs in an open-ended fee- for-service system has proved impossible to do without limiting ac- cess or sacrificing quality. Over the program’s entire history, in a vain attempt to get control of the waste in the system, Washington has made across-the-board payment reductions to providers with- out regard to quality or patient satisfaction. It has not worked. Costs have continued to grow, seniors continue to lose access to quality care, and the program remains on a path to bankruptcy. Absent reform, Medicare will be unable to meet the needs of cur- rent seniors and future generations. Reform aimed at empowering individuals—with a strengthened safety net for the poor and the sick—will not only ensure the fiscal sustainability of this program, the Federal budget, and the U.S. economy, but also guarantee that Medicare can fulfill the promisetjames on DSK6SPTVN1PROD with REPORTS of health security for America’s seniors. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00104 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 97 The Medicare reform envisioned in this budget resolution begins with a commitment to keep the promises made to those who now are in or near retirement. Consequently, for those 55 and older, the Medicare program and its benefits will remain as they are, without change. For future retirees, the budget supports an approach known as ‘‘premium support.’’ Starting in 2023, seniors (those who first become eligible by turn- ing 65 on or after January 1, 2023) would be given a choice of pri- vate plans competing alongside the traditional fee-for-service Medi- care program on a newly created Medicare Exchange. Medicare would provide a premium-support payment either to pay for or off- set the premium of the plan chosen by the senior, depending on the plan’s cost. The Medicare recipient of the future would choose, from a list of guaranteed coverage options, a health plan that best suits his or her needs. This is not a voucher program; a Medicare premium- support payment would be paid, by Medicare, directly to the plan or the fee-for-service program to subsidize its cost. The program would operate in a manner similar to that of the Medicare prescrip- tion drug benefit. The Medicare premium-support payment would be adjusted so that the sick would receive higher payments if their conditions worsened; lower-income seniors would receive additional assistance to help cover out-of-pocket costs; and wealthier seniors would assume responsibility for a greater share of their premiums. Also starting in 2023, the age of eligibility for Medicare would begin to rise gradually to correspond with Social Security’s retire- ment age. This approach to strengthening the Medicare program—which is based on a long history of bipartisan reform plans—would ensure security and affordability for seniors now and into the future. It would set up a carefully monitored exchange for Medicare plans. Health plans that chose to participate in the Medicare Exchange would agree to offer insurance to all Medicare beneficiaries, to avoid cherry-picking and ensure that Medicare’s sickest and high- est-cost beneficiaries receive coverage. While there would be no disruptions in the current Medicare fee- for-service program for those currently enrolled or becoming eligi- ble in the next 10 years, all seniors would have the choice to opt- in to the new Medicare program once it began in 2023. This budget envisions giving seniors the freedom to choose a plan best suited for them, guaranteeing health security throughout their retirement years. It would also expand that freedom to non-retirees by giving certain employers the option to offer their employees a free choice option, smoothing the transition from their working years to when seniors become Medicare-eligible. This would enable workers to de- vote their employer’s health coverage contribution to the purchase a health insurance plan that works best for them. This reform also ensures affordability by fixing the currently bro- ken subsidy system and letting market competition work as a real check on widespread waste and skyrocketing health care costs. Put- ting patients in charge of how their health care dollars are spent will force providers to compete against each other on price andtjames on DSK6SPTVN1PROD with REPORTS quality. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00105 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 98 ADDITIONAL IMPROVEMENTS IN THE MEDICARE PROGRAM A Long-Term ‘‘Doc Fix.’’ In recent years, Medicare’s physician re- imbursement formula—the ‘‘sustained growth rate’’ [SGR]—has threatened steep reductions in payments, leaving doctors uncertain about their incomes and, in some cases, reluctant to take on addi- tional Medicare patients. Congress has patched over the problem numerous times with ad hoc increases in reimbursements—a prac- tice known as the ‘‘doc fix.’’ These measures have become increas- ingly expensive to taxpayers without stabilizing the program. This budget accommodates legislation that fixes the Medicare physician payment formula for the next 10 years so that Medicare bene- ficiaries continue to have access to health care. It provides for a re- imbursement system that fairly compensates physicians who treat Medicare beneficiaries while providing incentives to improve qual- ity and efficiency. Ending the Raid on the Medicare Trust Fund. Supporters of the 2010 government takeover of health care insisted the law would both shore up the Medicare Trust Fund and pay for a new health care entitlement program. In testimony before the Committee, Medicare’s chief actuary stated the truism that the same dollar could not be used twice. This budget calls for directing any poten- tial Medicare savings in current law toward shoring up Medicare, not paying for new entitlements. The budget also urges repeal of the health care law’s new rationing board (the Independent Pay- ment Advisory Board), in addition to stabilizing plan choices for current seniors. Medical Liability Insurance Reform. This budget also advances common-sense curbs on abusive and frivolous lawsuits. Medical lawsuits and excessive verdicts increase health care costs and re- sult in reduced access to care. When mistakes happen, patients have a right to fair representation and fair compensation. But the current tort litigation system too often serves the interests of law- yers while driving up costs. The budget supports several changes to laws governing medical liability, including limits on noneconomic and punitive damages. Means-Testing Premiums for High-Income Seniors. This budget also advances a bipartisan proposal to further means-test pre- miums in Medicare Parts B and D for high-income seniors, similar to the President’s proposal in his fiscal year 2013 budget.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00106 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • FUNCTION 600: INCOME SECURITY Function Summary The welfare reforms of the late 1990s are a success story of mod- ern domestic policy, but they did not go as far as many think. Re- formers were not able to extend their work beyond cash welfare to other means-tested programs. Notably, programs that subsidize food and housing for low-income Americans remain dysfunctional, and their explosive growth is threatening the overall strength of the safety net. If the government continues running trillion-dollar deficits and experiences a debt crisis, the poor and vulnerable will undoubtedly be the hardest hit, as the Federal Government’s only recourse will be severe, across-the-board cuts. Most of the Federal Government’s income-support programs are included in Function 600, Income Security. These include: general retirement and disability insurance (excluding Social Security)— mainly through the Pension Benefit Guaranty Corporation [PBGC]—and benefits to railroad retirees. Other components are Federal employee retirement and disability benefits (including mili- tary retirees); unemployment compensation; low-income housing assistance, including Section 8 housing; food and nutrition assist- ance, including food stamps and school lunch subsidies; and other income security programs. This last category includes: Temporary Assistance to Needy Fam- ilies [TANF], the Government’s principal welfare program; Supple- mental Security Income [SSI]; spending for the refundable portion of the Earned Income Credit [EIC]; and the Low Income Home En- ergy Assistance Program [LIHEAP]. Agencies administering these programs include the Departments of Agriculture, Health and Human Services, Housing and Urban Development, the Social Se- curity Administration (for SSI), and the Office of Personnel Man- agement (for Federal retirement benefits). Summary of Committee-Reported Resolution The resolution calls for $517.1 billion in budget authority and $516.8 billion in outlays in fiscal year 2013. Discretionary spending is $59.9 billion in budget authority and $63.9 billion in outlays in fiscal year 2013. Mandatory spending in 2013 is $457.2 billion in budget authority and $452.9 billion in outlays. The 10-year totals for budget authority and outlays are $4.9 trillion and $4.8 trillion, respectively. While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set pri- orities and achieve efficiencies, it does not take the arbitrary ap- proach that will result from the Budget Control Act’s sequester.tjames on DSK6SPTVN1PROD with REPORTS (99) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00107 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 100 The House Republican budget replaces the sequester. If not re- placed, staff estimates show that this function would be reduced by another $4.7 billion below the committee recommendation in fiscal year 2013. Illustrative Policy Options Reforming the Federal Government’s income security programs can both strengthen the safety net and protect taxpayers. Among reforms that could be considered by the committees of jurisdiction are the following. DISCRETIONARY SPENDING Reduce Spending on the Low Income Home Energy Assistance Program [LIHEAP]. This budget assumes the same level of funding for LIHEAP in President Obama’s fiscal year 2013 budget request. This saves approximately $500 million in budget authority for fis- cal year 2013. MANDATORY SPENDING Block Grant the Supplemental Nutrition Assistance Program [SNAP]. Spending on SNAP—formerly known as the Food Stamp Program—has increased dramatically over the past three years. SNAP spending grew from $20.6 billion in 2002 to nearly $40 bil- lion in 2008, and is projected to be over $80 billion in 2012. While the increase between 2008 and 2012 is partially due to the reces- sion, SNAP spending is forecast to be permanently higher than pre- vious estimates even after employment has recovered. A variety of factors are driving this growth, but one major reason is that while the States have the responsibility of administering the program, they have little incentive to ensure it is well run. The budget resolution envisions converting SNAP into an allot- ment tailored for each State’s low-income population, indexed for inflation and eligibility. This option would make no changes to SNAP until 2016—after employment has recovered—providing States with time to structure their own programs. It would also en- vision improving work incentives by requiring a certain amount of people to engage in work activity, such as job search, community service activities and education and job training. This proposal is estimated to save $122.5 billion over 10 years. Eliminate Broad-Based Categorical Eligibility. Broad-based cat- egorical eligibility allows for households to be made eligible through receiving a minimal Temporary Assistance for Needy Fam- ilies [TANF] fund benefit or service. Typically, an individual is made eligible by receiving a TANF brochure or being referred to a social services ‘‘800’’ telephone number. This allows individuals to qualify for SNAP benefits under less restrictive criteria. For exam- ple, 40 states currently have no asset test for receiving SNAP bene- fits. Eliminate Abuse of LIHEAP: The Low Income Home Energy As- sistance Program [LIHEAP] provides low-income families with help to pay heating bills. However, many states are providing familiestjames on DSK6SPTVN1PROD with REPORTS with $1.00 in LIHEAP benefits in order to increase SNAP benefits VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00108 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 101 (see ‘‘Categorical Eligibility’’ above). This proposal would eliminate that abuse. Reform Civil Service Pensions. In keeping with a recommenda- tion from the National Commission on Fiscal Responsibility, this option calls for Federal employees—including Members of Congress and staff—to make greater contributions toward their own retire- ment. It would also eliminate the ability for individuals to receive a ‘‘special retirement supplement,’’ which pays Federal employees the equivalent of their Social Security benefit at an earlier age. As the Office of Personnel Management states on its website, this ben- efit is ‘‘unique’’ to the Federal Employee Retirement System. This would achieve significant budgetary savings and also help facilitate a transition to a defined contribution system for new Federal em- ployees that would give them more control over their own retire- ment security. From a fiscal responsibility standpoint, this option would replace a system that is creating unfunded future liabilities for taxpayers with a fully funded system: it could save an esti- mated $112.7 billion over 10 years. Conform Railroad Retirement Tier 1 Benefits to Social Security Benefits. Tier 1 benefits for railroad retirees are supposed to mimic Social Security benefits, but they are more generous than Social Security in many ways. This option would conform Tier 1 so that its benefits would equal those of Social Security, with an estimated savings to taxpayers of $2 billion over 10 years. Reform the Pension Benefit Guaranty Corporation [PBGC]. Cur- rently, the PBGC faces a $26 billion unfunded liability. While this budget does not assume the President’s proposal, it recognizes the need to reform the PBGC to ensure that a future taxpayer funded bailout does not occur. Potential savings could total an estimated $8.34 billion over 10 years. Eliminate the Failed Troubled Asset Relief Program [TARP] Housing Subsidies. This resolution supports jettisoning the loan subsidy initiative, Home Affordable Modification Program [HAMP], created by the Obama administration as part of TARP for home- owners delinquent on mortgage payments. While the program an- nounced in early 2009 that it would help up to four million home- owners avoid foreclosure, since then it has made only 762,839 loan modifications permanent—just 19 percent of the target. Elimi- nating HAMP could save $1.4 billion over 10 years. Unemployment Insurance. This budget resolution assumes that unemployment benefit expansions and extended benefits expire as scheduled under current law and does not assume another exten- sion of emergency unemployment insurance benefits. The previous expansions have increased UI benefits to 99 weeks—the longest that had ever been offered prior to this recession, and have been extended a record 11 times. Reform Supplemental Security Income. Welfare programs typi- cally pay benefits on a sliding scale. However, SSI is different, pay- ing an average of $600 for each and every child in a household that receives benefits. This reform would create a sliding scale for chil- dren on SSI. Advocates for the disabled have expressed support for creating a sliding scale for children on SSI in the past. For exam- ple, Jonathan Stein, a witness for the Democrats at an October 27,tjames on DSK6SPTVN1PROD with REPORTS 2011 Ways and Means Subcommittee hearing said about this pro- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00109 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 102 posal in 1995: ‘‘(W)e have a long list of reforms that we do not have time to get into, but we would say for very large families there should be some sort of family cap or graduated sliding scale of ben- efits.’’ Providing SSI on a sliding scale would save $3.5 billion over 10 years. Reform Means-Tested Entitlements. Congress should act to re- form means-tested entitlements. These programs have grown rap- idly over the past 10 years, and Congress should cap these pro- grams and begin devolving them to the States. This would build upon the historic progress of bipartisan welfare reform in the late 1990s. These reforms transformed cash welfare by encouraging work, limiting the duration of benefits, and giving states more con- trol over how money was being spent. The TANF reforms of the old Aid for Families with Dependent Children cut welfare caseloads in half as poverty rates declined.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00110 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • FUNCTION 650: SOCIAL SECURITY Function Summary This category consists of the Social Security Program, or Old Age, Survivors, and Disability Insurance [OASDI]. It is the largest budget function in terms of outlays and provides funds for the Gov- ernment’s largest entitlement program. Under provisions of the Congressional Budget Act and the Budget Enforcement Act, Social Security trust funds are considered to be off-budget. But a small portion of spending within Function 650—including general fund transfers of taxes paid on Social Security benefits—is on-budget. Therefore, although the discussion below describes both the on- budget and off-budget components, the budget resolution itself con- tains only the on-budget portion. Social Security must be reformed to prevent severe cuts in future benefits. This budget strengthens the program by establishing a re- quirement that policymakers come to the table and enact common- sense reforms to keep the program solvent for current beneficiaries and make it stronger for future generations. The President’s Commission on Fiscal Responsibility and Reform put forward a proposal in December of 2010 to make Social Secu- rity sustainably solvent over the 75-year actuarial period that is used to measure the soundness of the program—demonstrating that there is a bipartisan way forward. Summary of Committee-Reported Resolution Social Security contains both on-budget and off-budget spend- ing—the latter consisting of benefit payments for the OASDI pro- gram. The budget resolution reflects only the on-budget spending. In that category, the resolution calls for $53.2 billion in budget au- thority and $53.3 billion in outlays in fiscal year 2013. Over 10 years, the on-budget totals are $490.5 billion in budget authority and $490.8 billion in outlays. In the off-budget category, the resolution calls for $769.0 billion in budget authority for fiscal year 2013 and $765.5 billion in out- lays for fiscal year 2013. Over 10 years, the off-budget totals are $10.1 trillion in budget authority and $10.1 trillion in outlays. Illustrative Policy Options FACING SOCIAL SECURITY’S FISCAL PROBLEM An all-too-common reaction to the fiscal problem in Social Secu- rity has been denial that a problem exists. It is claimed that the Social Security Trust Fund will remain solvent for at least a dec- ade, at which point the government could theoretically cover anytjames on DSK6SPTVN1PROD with REPORTS (103) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00111 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 104 shortfall by raising taxes. Others downplay the necessity for change, contending that sustained economic growth could take care of the problem all by itself. Neither is correct. First, any value in the balances in the Social Security Trust Fund is derived from dubious government account- ing. The trust fund is not a real savings account. From 1983 to 2011, it collected more Social Security taxes than it paid out in So- cial Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing. Beginning in 2011, Social Security started paying out more in benefits than it collected in taxes—in other words, running cash deficits—a trend that will worsen as the baby boomers continue to retire. To pay full benefits, the government must pay back the money it owes Social Security. Those who wish to solve this problem by raising taxes ignore the profound economic damage that such large tax increases would en- tail. Just lifting the cap on income subject to Social Security taxes, as some have proposed, would, when combined with the Obama ad- ministration’s other preferred tax policies, lift the top marginal tax rate above 50 percent. Most economists agree that raising marginal tax rates that high would create a significant drag on economic growth, job creation, productivity and wages. Social Security’s fragile condition poses a serious problem that threatens to break the broader compact in which workers support the generation preceding them, and earn the support of those who follow. There is a bipartisan path forward on Social Security—one that requires all parties first to acknowledge the fiscal realities of this critical program. The President’s Fiscal Commission made a posi- tive first step by advancing solutions to ensure the solvency of So- cial Security. They suggested a more progressive benefit structure, with benefits for higher-income workers growing more slowly than those of workers with lower incomes who are more vulnerable to economic shocks in retirement. The Commission also recommended reforms that take account of increases in longevity, to arrest the demographic problems that are undermining Social Security’s fi- nances. In addition, there is bipartisan consensus that Social Security re- form should provide more help to those who fall below the poverty line after retirement. There is no security in a program that is blind to the needs of the Nation’s most vulnerable citizens—lower- income seniors should receive more targeted assistance than those who have had ample opportunity to save for retirement. While certain details of the Commission’s Social Security pro- posals, particularly on the tax side, are of debatable merit, the Commission undoubtedly made positive steps forward on bipartisan solutions to strengthen Social Security. This budget seeks to build on the Commission’s important work, calling on action to solve this pressing problem by requiring the President to put forward specifictjames on DSK6SPTVN1PROD with REPORTS ideas on fixing Social Security. The budget also puts the onus on VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00112 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 105 Congress to offer legislation to ensure the sustainable solvency of this critical program. STARTING THE PROCESS This budget calls for setting in motion the process of reforming Social Security by altering a current-law trigger that, in the event that the Social Security program is not sustainable, requires the President, in conjunction with the Social Security Board of Trust- ees, to submit a plan for restoring balance to the fund. This option would then require congressional leaders to put forward their best ideas as well. Although the Committee on Ways and Means would make the final determination, this option would require that: • If in any year the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability In- surance Trust Fund, in its annual Trustees’ Report, determines that the 75-year actuarial balance of the Social Security Trust Funds is in deficit, and the annual balance of the Social Security Trust Funds in the 75th year is in deficit, the Board of Trustees should, no later than the 30th of September of the same calendar year, submit to the President recommendations for statutory re- forms necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year. • No later than the 1st of December of the same calendar year in which the Board of Trustees submits its recommendations, the President shall promptly submit implementing legislation to both Houses of Congress including recommendations necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year; • Within 60 days of the President submitting legislation, the committees of jurisdiction to which the legislation has been re- ferred shall report the bill which shall be considered by the full House or Senate under expedited procedures. Again, the aim of this option is to force recognition of the need to save Social Security. This procedure offers a first step in that direction.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00113 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 700: VETERANS BENEFITS AND SERVICES Function Summary This category includes funding for the Department of Veterans Affairs [VA], which provides benefits to veterans who meet various eligibility rules. Benefits range from income security for veterans, principally disability compensation and pensions; veterans edu- cation, training, and rehabilitation services; hospital and medical care for veterans; and other veterans’ benefits and services, such as home loan guarantees. The past two decades have seen extraordinary growth in the costs of providing benefits and services for the nation’s 22 million veterans. The two largest categories of veterans spending are for income security and medical care. This growth occurred despite the declining size of the veterans population and reflects increased ben- efits legislated by Congress and the aging of the veterans popu- lation. Summary of Committee-Reported Resolution The resolution calls for $134.6 billion in budget authority and $135.2 billion in outlays in fiscal year 2013. This is an increase of 5 percent from last year’s level. Discretionary spending is $61.3 bil- lion in budget authority and $62.1 billion in outlays in fiscal year 2013. This resolution also provides for up to $54.5 billion in ad- vance appropriations for medical care, consistent with the Veterans Health Care Budget and Reform Transparency Act of 2009. Manda- tory spending in 2013 is $73.3 billion in budget authority and $73.2 billion in outlays. The 10-year totals for budget authority and out- lays are $1.5 trillion and $1.5 trillion, respectively. This is in line with the President’s request. This budget fully funds the Nation’s commitment to the services and benefits earned by veterans through their selfless military service. Those who have served in harm’s way have earned the gratitude of their countrymen and are the highest priority within this budget. While the Committee does not assume any savings in Function 700, it notes the bipartisan support for certain mandatory savings proposals. These proposals include: Repeal Hartness v. Nicholson court decision. In 2006, the Court of Appeals for Veteran Claims determined that age can be used to determine qualification for certain pension benefits rather than dis- ability status. Addressing this judicial expansion of the scope of veterans benefits through legislation would clarify eligibility for pension benefits for veterans age 65 and over and reaffirm the original intention of the law: that disability status, and not age, de-tjames on DSK6SPTVN1PROD with REPORTS (107) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00115 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 108 termines eligibility for certain pension benefits. This policy pro- posal was included in the joint House and Senate Veterans’ Affairs Committees’ letter to the Joint Select Committee on Deficit Reduc- tion [JSCDR] last year. COLA Round-down. Another savings recommendation included in the joint House and Senate Veterans’ Affairs Committees’ letter to the JSCDR is to round down to the nearest dollar the annual cost of living adjustment [COLA] for veterans’ disability compensa- tion and dependency and indemnity compensation. This minor ad- justment to compensation payments would have little impact, if any, on veterans and was also included in the President’s fiscal year 2013 budget request. Slow the growth in VA contributions towards increasing tuition rates. Veteran education benefits became significantly more gen- erous following the 2008 passage of the Post-911 GI Bill. The Post– 911 GI Bill covers veterans’ tuition, fees, and textbook costs, in ad- dition to providing a monthly living stipend. The rapidly increasing average cost of tuition nationwide—about 6 percent per year—is causing unexpected and considerable increases in education benefit spending. Furthermore, there is strong evidence that uncapped federal stu- dent loan programs—both for veterans and for other populations— are enabling the rapid rise of tuition costs. As higher-education an- alyst Art Hauptman has written, ‘‘it is difficult to believe that col- leges and universities could have increased their charges so rapidly over time without the ready availability of students’ ability to bor- row.’’ Both the House and Senate Veterans’ Affairs Committees pro- posed to the JSCDR that capping the annual increase in tuition support at 3 percent would lead to substantial savings and, by no longer enabling rapidly rising tuition, would not adversely impact veterans at all.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00116 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 750: ADMINISTRATION OF JUSTICE Function Summary The Administration of Justice function consists of Federal law enforcement programs, litigation and judicial activities, correctional operations, and State and local justice assistance. Activities funded within this function include: the Federal Bureau of Investigation [FBI]; the Drug Enforcement Administration [DEA]; border and transportation security; the Bureau of Alcohol, Tobacco, Firearms and Explosives [ATF]; the United States Attorneys; legal divisions within the Department of Justice [DOJ]; the Legal Services Cor- poration; the Federal Judiciary; and the Federal Bureau of Prisons. This function also includes several components of the Department of Homeland Security. Summary of Committee-Reported Resolution The resolution calls for $54.3 billion in budget authority and $57.6 billion in outlays in fiscal year 2013. Discretionary spending is $51.8 billion in budget authority and $53.8 billion in outlays in fiscal year 2013. Mandatory spending in 2013 is $2.4 billion in budget authority and $3.9 billion in outlays. The 10-year totals for budget authority and outlays are $579.4 billion and $596.3 billion, respectively. Spending in this function has increased by $26.7 billion or an in- crease of 75 percent over the past decade. According to the Govern- ment Accountability Office [GAO], since fiscal year 2005, over $30 billion has been disbursed to more than 200 DOJ programs author- ized through three sources: Community Oriented Policing Services, the Office of Justice Programs, and the Office on Violence Against Women. The GAO has determined that many of these grants—sev- eral of which have been used to fund recreational activities, fashion shows, pool parties, and even doughnut-eating contests—could be viewed as wasteful, overlapping and duplicative. With our nation facing dangerous terrorist threats as well as a tidal wave of debt, Federal taxpayer money for the Department of Justice should be focused on administering justice, arresting and prosecuting terrorists, investigating crimes, and seeking punish- ment for those guilty of unlawful behavior. It’s the job of the States and communities to determine the best course of action in deter- ring crime. The budget focuses on funding core government respon- sibilities and reducing duplication, excess, and unnecessary spend- ing. While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set pri- orities and achieve efficiencies, it does not take the arbitrary ap- proach that will result from the Budget Control Act’s sequester.tjames on DSK6SPTVN1PROD with REPORTS (109) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 110 The House Republican budget replaces the sequester. If not re- placed, based on staff estimates, this function would be reduced by another $5.7 billion below the committee recommendation in fiscal year 2013. Illustrative Policy Options As elsewhere, the committees of jurisdiction will make final pol- icy determinations. The proposals below indicate policy options that might be considered. DISCRETIONARY SPENDING Consolidate Justice Grants. In 2010, DOJ awarded nearly $3.9 billion in grants, including $4.0 billion provided in the 2009 stim- ulus bill. The Congressional Research Service [CRS] and GAO iden- tified overlap and duplication within many of these grant pro- grams. CRS suggested ‘‘possible policy options could include alter- ing the current grant programs to target funding for specific activi- ties in each grant program or consolidating the different grant pro- grams into one large program.’’ In addition, these grant programs address law-enforcement issues that are primarily state and local responsibilities. This option streamlines grants into three cat- egories—first responder, law enforcement, and victims—while eliminating waste, inefficiency and bureaucracy. Adopt ‘‘YouCut’’ Proposals. The budget also supports several of the House Republican ‘‘YouCut’’ proposals introduced during the 111th and 112th Congresses. One proposal in Function 750 is the elimination of the duplicative National Drug Intelligence Center, which would save more than $400 million over 10 years.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00118 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 800: GENERAL GOVERNMENT Function Summary General government consists of the activities of the Legislative Branch; the Executive Office of the President; general tax adminis- tration and fiscal operations of the Department of the Treasury (in- cluding the Internal Revenue Service [IRS]); the Office of Personnel Management, and the real property and personnel costs of the Gen- eral Services Administration; general purpose fiscal assistance to States, localities, the District of Columbia, and U.S. territories; and other general government activities. Several programs in general government have seen steady growth since 2008. The American Recovery and Reinvestment Act increased the General Services Administration’s budget by $5.8 bil- lion, for example. The President’s 2013 budget requests significant increases for this function, boosting budget authority by 20 percent compared to 2008 levels. Summary of Committee-Reported Resolution The resolution calls for $23.2 billion in budget authority and $25.1 billion in outlays in fiscal year 2013. Discretionary spending is $16.8 billion in budget authority and $18.5 billion in outlays in fiscal year 2013. Mandatory spending in 2013 is $6.3 billion in budget authority and $6.6 billion in outlays. The 10-year totals for budget authority and outlays are $239.6 billion and $241.0 billion, respectively. Illustrative Policy Options The resolution aims to eliminate identified waste across all Fed- eral Government branches and agencies. Federal pay, benefits, and mismanagement of properties are just a few areas into which the government can look for savings that would reduce economic distor- tions harmful to the private sector. While the committees of juris- diction will determine the actual policies in pursuit of these goals, the options below offer several potential approaches. Prohibit New Construction. In fiscal year 2010, the government owned 77,700 properties which were either underutilized or not uti- lized at all, at a cost of $1.7 billion. This budget adopts the policy of the fiscal year 2011 continuing resolution, H.R. 1, to prohibit new construction for one year of government buildings managed by the General Services Administration. Adopt ‘‘YouCut’’ Proposals. The budget also incorporates several of the House Republican ‘‘YouCut’’ proposals introduced during the 111th and 112th Congresses. One example in Function 800 is thetjames on DSK6SPTVN1PROD with REPORTS (111) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00119 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 112 elimination of the Presidential Election Campaign Fund, which saves over $350 million over 10 years. Reduce Student Loan Repayment for Government Jobs. As the Nation struggles with high unemployment and uncertainty in the private sector, taxpayer dollars go to fund Federal jobs that are not only insulated from market forces, but enjoy above-average pay and benefits, one of which is repayments of student loans. The budget calls for reducing this extra benefit that is not generally available in the private sector. Terminate the Election Assistance Commission [EAC]. This inde- pendent agency was created in 2002 as part of the Help America Vote Act to provide grants to States to modernize voting equip- ment. Its mission has been fulfilled. Even the National Association of Secretaries of State has passed resolutions stating that the EAC has served its purpose and funding is no longer necessary. EAC should be eliminated and any remaining valuable functions trans- ferred to the Federal Election Commission. Accompany pro-growth tax reform with responsible reductions to the Internal Revenue Service [IRS]. Changes in the tax code are oc- curring at a rate of approximately one a day and the Internal Rev- enue Code now contains approximately four million words. Each year, taxpayers and businesses spend an unbelievable six billion hours complying with filing requirements. This resolution calls for simplifying the burdensome tax code, naturally reducing the agen- cy’s size by promoting policies that lead to less reliance on the IRS.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 900: NET INTEREST Function Summary One of the worst effects of large, chronic budget deficits is the high interest cost it produces. Interest payments yield no govern- ment services or benefits; they are simply excess costs resulting from a history of spending beyond the government’s means. These costs are reflected in Function 900, which presents the interest paid for the Federal Government’s borrowing less the interest re- ceived by the Federal Government from trust fund investments and loans to the public. It is a mandatory payment, with no discre- tionary components. For the past three years, the Federal Government has run defi- cits in excess of $1 trillion, and despite some discretionary spend- ing reductions since the beginning of the 112th Congress, the Fed- eral budget is on track for another year with a deficit above $1 tril- lion. Because much of this spending is so deeply entrenched, reduc- ing the associated interest costs will require sustained spending re- straint. This budget resolution does so and it reduces net interest by $514 billion over 10 years compared with the President’s budget. Summary of Committee-Reported Resolution The resolution calls for $234.2 billion in mandatory budget au- thority and outlays in fiscal year 2012. The 10-year totals for budg- et authority and outlays are $4.26 trillion. On-budget mandatory budget authority and outlays are $344.4 billion in fiscal year 2013, and $5.32 trillion over 10 years. The on- budget figures are larger than the function totals because the former are offset by off-budget interest payments to the Social Se- curity Trust Fund, which are reflected as negative numbers. Off-budget mandatory budget authority and outlays are ¥$110.2 billion in fiscal year 2013, and ¥$1.06 trillion over 10 years.tjames on DSK6SPTVN1PROD with REPORTS (113) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 920: ALLOWANCES Function Summary Function 920 represents a category called ‘‘allowances’’ that cap- tures the budgetary effects of cross-cutting proposals or contin- gencies that impact multiple functions rather than one specific area of the budget. It also represents a place-holder category for any budgetary impacts that the Congressional Budget Office [CBO] has yet to assign to a specific budget function. CBO typically reassigns the budgetary effects of any legislation enacted within Function 920 once a new baseline update is released. Summary of Committee-Reported Resolution In August 2011, Congress enacted the Budget Control Act of 2011 [BCA] (P.L. 112–25) that provided for significant spending re- ductions enforced by statutory spending caps and an automatic se- questration process. The BCA did not specify a distribution of spending reductions in specific budget functions other than defense (Function 050) and Medicare (Function 570). The law, however, did require reductions in non-defense and non-Medicare areas of the budget. At the time that the March 2012 baseline was released, CBO did not have account-level information on what non-defense and non-Medicare accounts the administration had determined were exempt from reduction under the terms of the BCA. CBO, therefore, has assigned the non-defense and non-Medicare reduc- tions required by the BCA to Function 920. The CBO baseline for Function 920 includes a total of $689 bil- lion and $629 billion in reductions for budget authority and out- lays, respectively, to reflect the impact of the BCA on non-defense and non-Medicare spending. The following four components are in- cluded in the baseline: 1. A $265 billion and $235 billion reduction in non-defense budg- et authority and outlays, respectively, needed to comply with the discretionary spending caps set by the BCA in section 101(c). 2. An additional $362 billion and $336 billion reduction in total non-defense budget authority and outlays, respectively, needed to comply with the automatic sequester provision and revised discre- tionary spending caps under Section 302 of the BCA. 3. A $15 billion and $11 billion reduction in discretionary budget authority and outlays, respectively, for disaster-relief-designated spending not subject to the BCA spending caps. Under CBO’s nor- mal scoring conventions, the discretionary baseline reflects the most recently enacted discretionary level adjusted for inflation in the out years. Section 251(b)(2)(D) of the Balanced Budget and Emergency Deficit Control Act, as amended by the BCA, however,tjames on DSK6SPTVN1PROD with REPORTS (115) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00123 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 116 limits upward adjustments in spending limits for disaster-relief- designated spending to the 10-year rolling average of previous dis- aster-relief-designated spending (excluding the highest and lowest years in calculating that average). CBO has estimated that a dis- cretionary baseline carrying an inflated level of disaster spending, as provided for in the Consolidated Appropriations Act of 2012 (P.L. 112–74), would result in disaster-relief spending levels great- er than the rolling average limit set forth in the BCA. Therefore, CBO has added a downward adjustment in Function 920 to reduce disaster relief-designated spending in its baseline to comply with the BCA limit. 4. A $46 billion reduction in both budget authority and outlays to non-Medicare and non-defense mandatory programs necessary to comply with the terms of the BCA. Illustrative Policy Options Reconciliation and Sequester. This budget resolution assumes all savings called for by the BCA will, in fact, be realized. The budget, however, replaces the BCA’s fiscal year 2013 automatic sequester process for discretionary programs and its arbitrary across-the- board reductions in these programs with a more strategically sen- sible policy that meets the primary responsibility of government— the common defense, as well as other priorities. Accordingly, it achieves these savings through non-defense discretionary and man- datory savings that will be achieved through the reconciliation process. For fiscal year 2013, the CBO baseline projects the BCA seques- ter would reduce non-defense discretionary budget authority and outlays by $43 billion and $23 billion, respectively. The budget re- places the non-defense discretionary savings assumed in Function 920 for fiscal year 2013 with specific spending reductions in other functions while leaving the mandatory spending reductions in Function 920 in place. For fiscal years 2014 and beyond, the budget abides by the lower total discretionary and mandatory spending caps enacted as part of the BCA. In this way, the budget ensures that all of the remaining savings called for by the BCA will be achieved either through future policy decisions or the automatic en- forcement procedures of the BCA. Federal Employee Pay Freeze and Attrition. The budget assumes cumulative discretionary savings of $256 billion over 10 years by extending a freeze in federal employee pay that began in 2011 for three more years through 2015 and assuming a reduction in the federal civilian workforce through attrition whereby the adminis- tration would be permitted to hire one employee for every three that leave government service. Agencies involved in national secu- rity would be exempt from any limitation on hiring. Adjustment for Disaster-Spending Plug in the CBO Baseline. The budget assumes that any future disaster-relief-designated spending will be fully offset within the discretionary levels provided in this resolution. Accordingly, the budget does not assume the extension of the disaster funding enacted last year and the upward adjust- ment in the BCA’s spending caps for subsequent years, and it re- flects the removal of this spending. Over 10 years, the budget in-tjames on DSK6SPTVN1PROD with REPORTS cludes savings of $101 billion in budget authority and $91 billion VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00124 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 117 in outlays by assuming that any future disaster funding is accom- modated within the caps. The impact of removing CBO’s disaster-relief-designated spend- ing adjustment included in the Function 920 baseline is $15 billion and $11 billion in budget authority and outlays, respectively. Elimination of Student Loan Repayment for Government Employ- ees. The budget assumes cumulative discretionary savings over 10 years of $800 million in budget authority and $670 million in out- lays by eliminating the repayment by the government of student loans for government employees. Program Integrity. The budget assumes that program integrity funding is accomplished within existing BCA cap levels for fiscal year 2013 through fiscal year 2021. By providing full funding for anti-fraud and other program integrity programs, this saves, on net, $11.8 billion.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS Function Summary This function consists of offsetting receipts to the Treasury, which are recorded as negative budget authority and outlays. Re- ceipts recorded in this function are either intrabudgetary (a pay- ment from one Federal agency to another, such as agency pay- ments to the retirement trust funds) or proprietary (a payment from the public for some kind of business transaction with the gov- ernment). The main types of receipts recorded in this function are: the payments Federal employees and agencies make to employee retirement trust funds; payments made by companies for the right to explore and produce oil and gas on the Outer Continental Shelf, and payments by those who bid for the right to buy or use public property or resources, such as the electromagnetic spectrum. The function also contains an off-budget component that reflects the Federal Government’s share of Social Security contributions for Federal employees. Summary of Committee-Reported Resolution The resolution calls for ¥$100.6 billion in budget authority and outlays in fiscal year 2013 (with the minus sign indicating receipts into the Treasury). Over 10 years, budget authority and outlays total ¥$1.139 trillion. On-budget amounts are ¥$84.7 billion in budget authority and outlays in fiscal year 2012, and ¥$954.3 billion in budget authority and outlays over 10 years. Off-budget amounts are ¥$15.8 billion in budget authority and outlays in fiscal year 2013, and ¥$185.3 billion in budget authority and outlays over 10 years. Illustrative Policy Options Federal Fleet Sales. The President’s Fiscal Commission rec- ommended several ways to achieve discretionary savings. This res- olution adopts many of their proposals, such as reducing the Fed- eral auto fleet by 20 percent, excluding the Department of Defense and the U.S. Postal Service. In 2010, the Federal Government re- ported a worldwide inventory of more than 662,000 vehicles and spent $4.6 billion on its fleet. In addition, the 2009 stimulus bill provided $300 million to ‘‘green the Federal fleet’’ by purchasing 17,205 vehicles—most of which became another back-door bailout for General Motors and Chrysler. This resolution builds on the Fiscal Commission’s recommenda- tion by proposing to sell a portion of the Federal fleet to reduce thetjames on DSK6SPTVN1PROD with REPORTS (119) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00127 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 120 deficit and to get rid of unneeded vehicles, saving hundreds of mil- lions of dollars. Federal Real Property Sales. The Fiscal Commission highlighted potential budget savings from another area where the mismanage- ment of taxpayer-owned assets and sheer amount of waste are staggering: Federal real estate and other property. The Federal real property inventory is so massive that the report accounting for it lags two years behind the current budget year. The most recent General Services Administration’s Federal Real Property Report is from fiscal year 2010 and summarizes data from 2009. With such large timing differences and accompanying confusion, there is very little incentive for agencies to dispose of unneeded properties and very few repercussions from holding onto these properties indefi- nitely. The Federal Government owns, leases, or manages 1.1 mil- lion properties nationwide. Of those, non-defense buildings ac- counted for at least 400,000 of the total. Yet the government’s track record for real estate asset sales has been poor. In 2009, Federal agencies received only about $50 million in pro- ceeds from the sale of 2,228 assets—an average of $22,500 per property. Many buildings were simply given away as below-market- value bargains or even for free. On top of that, agencies reported spending $150 million in 2009 on the operating costs alone of prop- erties that were already deemed to be unneeded and were waiting to either be sold or disposed. This resolution supports the Office of Management and Budget’s continued advocacy of streamlining the asset sale process; loos- ening regulations for the disposal and sale of Federal property to eliminate red tape and waste; setting enforceable targets for asset sales; and holding government agencies accountable for the build- ings they oversee. If done correctly, taxpayers can recoup billions of dollars from selling unused government property. Federal Land. In addition to Federal fleet and real property sales, this resolution supports examining Federal land to see where cost savings can be achieved by selling unneeded acreage in the open market while simultaneously protecting land considered a na- tional treasure, such as the 84 million acres managed by the Na- tional Park Service. Currently, the Federal Government owns 650 million acres of land—almost 30 percent of the land area of the United States.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • FUNCTION 970: GLOBAL WAR ON TERRORISM AND RELATED ACTIVITIES Function Summary This function includes funding for prosecution of the global war on terrorism [GWOT] and other closely related activities. Summary of Committee-Reported Resolution This resolution calls for $96.7 billion in budget authority and $51.1 billion in new outlays in fiscal year 2013. This includes amounts equal to the President’s request to account for any future House consideration of appropriations for the global war on ter- rorism and other activities. This function accommodates all of the funding requested by the Department of Defense for military oper- ations and by the Department of State for the incremental, non-en- during civilian activities in Afghanistan, Pakistan, and Iraq. The funding budgeted in this function is not to be used as a reserve fund for other non-war activities. Defense Activities. This resolution assumes $88.5 billion for the military activities of the Department of Defense related to Afghani- stan and Iraq. Given the complete withdrawal of U.S. military forces from Iraq at the end of 2011, the funding requested for Iraq is solely for the purpose of providing security assistance and cooperation with Iraqi security forces. As the U.S.-Iraq relationship transitions to a more normal state-to-state relationship, the funding for these activities should also transition to the base budget. It is our expectation that these activities will not be funded on a permanent basis outside the appropriate agency budgets. For Afghanistan, the budget request assumes average troop lev- els of 68,000 personnel as requested by the Department of Defense. This troop level is expected to be achieved by September 2012, a month before the start of fiscal year 2013. Defense Secretary Pa- netta has recently stated that Afghan security forces could assume lead responsibility for providing security during 2013, which sug- gests that the assumed force level may well be in excess of the lev- els that will be realized. Uncertainty is an inherent element of war- fare, but the troop level assumption on which this budget request was built would seem to provide a cushion to offset the President’s proposed cuts in the base defense budget. On top of this, the Presi- dent’s request also shifts all compensation costs for nearly 65,000 soldiers and marines from the base budget to the war budget. Viewed together, it appears that the administration is attempting to ameliorate the effects of its precipitous cuts in the defense budg- et by hiding costs in the uncapped war budget. Any such efforttjames on DSK6SPTVN1PROD with REPORTS (121) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00129 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 122 abuses Congress’s efforts to fully budget for the war’s extraordinary expenses and not allow these funds to be used for other purposes. Civilian Activities. This resolution assumes $8.2 billion for the activities of civilian agencies—primarily the State Department and the U.S. Agency for International Development—as part of the in- tegrated civil-military strategy for securing American objectives in the frontline states. Of this total, $4 billion will be used for the civilian presence in Iraq to continue the transition process. The majority of Iraq GWOT funding will support diplomatic operations and military assistance programs recently transitioned from the Department of Defense. This budget also assumes a full year of operations funding for the Police Development Program [PDP] which trains Iraqi Security Forces to administer and sustain policing operations and provide for Iraq’s internal security. The Special Inspector General for Iraq Reconstruction [SIGIR] has raised concerns regarding PDP’s effec- tiveness and the transparency of program spending. SIGIR notes that only 12 percent of program funds will be used for the pro- gram’s purpose—advising and developing Iraqi police forces—while the majority of the budget (88 percent) will fund security and life support. Assessing whether outputs of this program justify the sub- stantial financial inputs needs to be further investigated. SIGIR also cites the State Department’s failure to provide sufficient de- tails on program costs, budgets, and measurements of performance outcomes. The State Department needs to respond to these con- cerns and ensure transparency and accountability of costs for PDP in the future. As the U.S. relationship with Iraq transitions to a more normal state-to-state relationship, future funding for U.S. operations in that country should also shift to the base budget. For Afghanistan, this budget assumes $3.2 billion to support U.S. civilian-led efforts to transfer security and governance responsibil- ities to the Afghans, in addition to providing foreign assistance pro- grams that promote economic development and improve governance capacity. This budget also includes funding for counternarcotics and criminal justice programs. All of these efforts are in support of the U.S. counterinsurgency strategy in Afghanistan. In order to succeed in Afghanistan, the United States must con- tinue partnering with Pakistan to counter the spread of extremism, which threatens America and the world. Approximately $1 billion is provided for the Pakistan Counterinsurgency Capability Fund, which builds the capacity of Pakistan’s security forces to effectively combat terrorism within its borders.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00130 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • REVENUE Led by House Ways and Means Committee Chairman Dave Camp of Michigan, this budget advances a framework that calls for an American tax system that is simple, efficient and fair to pro- mote innovation and sustained job creation in the private sector.8 The House Ways and Means Committee held more than a dozen hearings devoted to tax reform last year. Last October, Chairman Camp formally released an international tax reform discussion draft, with proposals designed to boost competitiveness and job cre- ation in the United States. This budget reflects the progress that has been made over the past year by the House Ways and Means Committee, and calls for continued leadership to advance tax re- form in the year ahead. This budget starts with the proposition that first, Congress must do no harm. It assumes that Congress will not allow massive, across-the-board tax increases to hit the economy in 2013. This budget then attacks complexity, unfairness, and inefficiency in the tax code with a set of fundamental reforms designed to lower tax rates, broaden the tax base, and reform the U.S. international tax rules, while getting rid of distortions, loopholes and preferences that divert economic resources from their most efficient uses. Following the unveiling of a principled approach to tax reform in last year’s budget resolution, an overwhelming consensus has emerged that the country is in dire need of reform that lowers rates, broadens the tax base, and addresses global competitiveness. After three years, the administration also has begun to recognize the need for tax reform. The outline for corporate tax reform re- leased by the administration in February, however, falls woefully short: the rates are too high; the tax base is too narrow (and used as a tool to provide political favors); and the international reforms are anti-competitive. By contrast, the principles of reform outlined in this budget en- sure a simpler, fairer tax code not just for large corporations but for small businesses and American families as well. Unlike the ad- ministration’s plan, it improves the competitiveness of American workers and businesses in the global economy. America’s trading partners have already reformed their tax systems to provide their companies with a competitive advantage. Competing in a 21st cen- tury global economy requires that America do the same. 8 See also, following this section of the report, the Views and Estimates letter from the Com- mittee on Ways and Means that was signed by every Republican on the Committee.tjames on DSK6SPTVN1PROD with REPORTS (123) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 124 Simplifying the Tax Code and Promoting Job Creation and Economic Growth Major proposals in this area are: • Reject the President’s call to raise taxes. • Consolidate the current six individual income tax brackets into just two brackets of 10 and 25 percent. • Reduce the corporate rate to 25 percent. • Repeal the Alternative Minimum Tax. • Broaden the tax base to maintain revenue at the appropriate level designated by this budget resolution for the next 10 years, and at a share of the economy consistent with historical norms of 18 to 19 percent in the following decades. These are levels compat- ible with growth, and—if the spending restraints in this budget are enacted—sufficient to fund government operations over time. • Shift from a ‘‘worldwide’’ system of taxation to a ‘‘territorial’’ tax system that puts American companies and their workers on a level playing field with foreign competitors and ends the ‘‘lock-out effect’’ that discourages companies from bringing back foreign earn- ings to invest in the United States. In 1981, President Ronald Reagan inherited a stagnant economy and a tax code that featured 16 brackets, with a top rate of 70 per- cent. When he left office in 1989, the tax code had been simplified down to just three brackets, with a top rate of 28 percent. Reagan’s tax reforms proved to be a cornerstone of the unprecedented eco- nomic boom that occurred in the decade during his presidency and continued in the decade that followed. Over time, additional brackets, credits, carve-outs and lobbyist loopholes have undone the simpler and fairer tax code ushered in by the 1986 tax reform. In the last 10 years alone, there have been nearly 4,500 changes made to the tax code. The current version for individuals has six brackets, with a top rate of 35 percent (which is set to climb to over 40 percent after the end of 2012, when hid- den rates are considered). Individuals react negatively toward the tax code partly because it is complex and attempts to steer them toward certain activities and away from others. In addition, there are always a few ‘‘surprises’’ that end up raising their tax bills. One such surprise—the Alternative Minimum Tax (AMT)—was ini- tially designed to hit only the very highest-income taxpayers but now ensnares a growing number of middle-class households be- cause of a flawed design. This budget affirmatively rejects President Obama’s efforts to raise tax rates on small businesses and investors and to add new loopholes to the tax code for favored interests. Economic theory and analysis show that increasing marginal tax rates—tax increases that reduce incentives to work, save and invest that next dollar of income—reduces economic output. By contrast, reductions in mar- ginal tax rates increase output, mainly by letting people keep more of each dollar they earn and thereby strengthening incentives to work, produce, and invest in the future. The House plan both real- izes the job-promoting benefits of lower rates and ensures these re- ductions are revenue neutral through base broadening. Unlike President Obama’s proposal, the House plan would nottjames on DSK6SPTVN1PROD with REPORTS penalize the nearly three quarters of America’s small businesses VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00132 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 125 that file taxes as individuals by imposing higher individual rates that make it harder for these vital enterprises to compete. As President Obama repeatedly says, small businesses have been re- sponsible for two-thirds of the jobs created in the United States over the past 15 years, yet he often neglects to point out that roughly 50 percent of small-business profits are taxed at the top two individual tax rates. Raising these rates means increasing taxes on the most successful job creators. Raising taxes on capital is another idea that purports to affect the wealthy but actually hurts all participants in the economy. Mainstream economics, not to mention common sense, teaches that raising taxes on any activity generally results in less of it. Econom- ics and common sense also teach that the size of a nation’s capital stock—the pool of saved money available for investment and job creation—has an effect on employment, productivity, and wages. Tax reform should promote savings and investment because more savings and more investment mean a larger stock of capital avail- able for job creation. That means more jobs, more productivity, and higher wages for all American workers. The negative effects of high tax rates on work, savings and in- vestment are compounded when a large mix of exemptions, deduc- tions and credits are added to the system. These tax preferences are similar to government spending—instead of markets directing economic resources to their most efficient uses, the government di- rects resources to politically favored uses, creating a drag on eco- nomic growth and job creation. In the worst cases, these tax subsidies literally take the form of spending through the tax code, because they take taxes paid by hardworking Americans and issue government checks to individ- uals and corporations who do not owe any taxes at all. In fact, President Obama’s corporate tax ‘‘reform’’ framework would expand this practice by transferring taxes paid by middle-income Ameri- cans to the pockets of politically favored industries. Eliminating large tax subsidies would not be for the purpose of increasing total tax revenues. Instead, when offset by lower rates, it would have a doubly positive impact on the economy—it would stop diverting economic resources to less productive uses, while making possible the lower tax rates that provide greater incentives for economic growth. There is an emerging bipartisan consensus for tax reform that lowers tax rates, broadens the tax base, and promotes growth and job creation. President Reagan’s tax reforms inaugurated an era of great prosperity. It is time to build upon his leadership and ad- vance a fundamental reform of the broken tax code as a critical step in rebuilding the foundations for economic growth: spending restraint, reasonable and predictable regulations, sound money, and a simple tax code with low rates.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00133 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, DC, March 1, 2012. Hon. PAUL RYAN, Chairman, Committee on the Budget, 207 Cannon House Office Building, Washington, DC. DEAR MR. CHAIRMAN: Last year’s budget resolution provided the initial outlines of the Ways & Means Committee’s agenda for tax reform. The Committee intends to build on the significant work it undertook over the last year to advance tax reform and believes that the Budget Resolution for Fiscal Year 2013 should reflect the progress that has been made and the work the Committee intends to undertake this year. Therefore, the Committee is expanding on the discussion of tax reform contained in the Budget Resolution for Fiscal Year 2012. The Committee is transmitting the attached paper as our recommendation for inclusion in the Budget Resolu- tion for Fiscal Year 2013. Sincerely, DAVE CAMP, Chairman. PRO-GROWTH TAX REFORM The American tax system should be simple, efficient and fair to promote innovation and sustained job creation in the private sector. The current U.S. tax code fails on all these fronts. The system is notoriously complex, as individuals, families and employers spend over six billion hours and over $160 billion per year trying to nego- tiate a labyrinth of deductions and credits, a tangle of different rules for characterizing income, and a variety of schedules for tax- ing that income. Simply put, the code is too costly and too burden- some and is hindering job creation. The U.S. tax system is highly inefficient, as tax considerations rather than economic fundamentals often distort individual deci- sions to work, save, and invest, which leads to slower economic growth. For example, on April 1, 2012, the United States will achieve the dubious distinction of having the highest corporate tax rate (federal and state combined) in the developed world—a factor that discourages employers and investors from locating in the United States. Furthermore, the United States has become an outlier in that it still uses a ‘‘worldwide’’ system of taxation. That system has not been substantially reformed in 50 years—when the United States accounted for half of global economic output and had no serious competitors around the world. This combination of the highest corporate tax rate with an antiquated ‘‘worldwide’’ system subjects American companies to double taxation when they attempt to compete with foreign companies in overseas markets and then reinvest their earnings in the United States.tjames on DSK6SPTVN1PROD with REPORTS (127) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 128 The code is also patently unfair. It is littered with lobbyist loop- holes that benefit narrow special interests. Washington should not be in the business of picking winners and losers based on which in- dustry is politically popular or powerful. Nor should two families in similar circumstances pay very different tax bills based on which has the better accountant. A tax code that leads to such results vio- lates the fundamental American principle of equal justice. This budget starts with the proposition that first, Congress must do no harm. It assumes that Congress will not allow massive, across-the-board tax increases to hit the economy in 2013, when current law calls for the tax cuts that were first enacted in 2001 and 2003 to expire. And it assumes that Congress will not let the Alternative Minimum Tax (AMT)—originally designed to catch a handful of super-wealthy households who paid no federal income tax—ensnare tens of millions of middle-class American families. This budget then attacks all three of the problems described above with a set of fundamental reforms designed to lower tax rates, broaden the tax base, and reform the U.S. international tax rules, while getting rid of distortions, loopholes and preferences that di- vert economic resources from their most efficient uses. Following the unveiling of these principles in last year’s budget resolution, an overwhelming consensus has emerged that the coun- try is in dire need of tax reform that lowers rates, broadens the tax base, and addresses global competitiveness. After three years, the Administration also has begun to recognize the need for tax reform. The outline for corporate tax reform released by the Administration in February, however, falls woefully short: the rates are too high; the tax base is too narrow (and used as a tool to provide political favors); and the international reforms are anti-competitive. By contrast, the principles of reform outlined in this budget en- sure a simpler, fairer tax code not just for large corporations but for small businesses and American families as well. Unlike the Ad- ministration’s plan, it improves the competitiveness of American workers and businesses in the global economy. Our trading part- ners have already reformed their tax systems to provide their com- panies with a competitive advantage. Competing in a 21st century global economy requires that we do the same. Simplifying the Tax Code and Promoting Job Creation and Economic Growth Major proposals • Reject the President’s call to raise taxes. • Consolidate the current six individual income tax brackets into just two brackets of 10 and 25 percent. • Reduce the corporate rate to 25 percent. • Repeal the Alternative Minimum Tax. • Broaden the tax base to maintain revenue at the appropriate level designated by this budget resolution for the next ten years, and at a share of the economy consistent with historical norms of 18 to 19 percent in the following decades. These are levels compat- ible with growth, and—if the spending restraints in this budget aretjames on DSK6SPTVN1PROD with REPORTS enacted—sufficient to fund government operations over time. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00136 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 129 • Shift from a ‘‘worldwide’’ system of taxation to a ‘‘territorial’’ tax system that puts American companies and their workers on a level playing field with foreign competitors and ends the ‘‘lock-out effect’’ that discourages companies from bringing back foreign earn- ings to invest in the United States. In 1981, President Ronald Reagan inherited a stagnant economy and a tax code that featured 16 brackets, with a top rate of 70 per- cent. When he left office in 1989, the tax code had been simplified down to just three brackets, with a top rate of 28 percent. Reagan’s tax reforms proved to be a cornerstone of the unprecedented eco- nomic boom that occurred in the decade during his presidency and continued in the decade that followed. Over time, additional brackets, credits, carve-outs and lobbyist loopholes have undone the simpler and fairer tax code ushered in by the 1986 tax reform. In the last ten years alone, there have been nearly 4,500 changes made to the tax code. The current version for individuals has six brackets, with a top rate of 35 percent (which is set to climb to over 40 percent after the end of 2012, when hid- den rates are considered). Individuals react negatively toward the tax code partly because it is complex and attempts to steer them toward certain activities and away from others. In addition, there are always a few ‘‘surprises’’ that end up raising their tax bills. One such surprise—the Alternative Minimum Tax (AMT)—was ini- tially designed to hit only the very highest-income taxpayers but now ensnares a growing number of middle-class households be- cause of a flawed design. The House plan affirmatively rejects President Obama’s efforts to raise tax rates on small businesses and investors and to add new loopholes to the tax code for favored interests. Economic theory and analysis show that increasing marginal tax rates—tax increases that reduce incentives to work, save and invest that next dollar of income—reduces economic output. By contrast, reductions in mar- ginal tax rates increase output, mainly by letting people keep more of each dollar they earn and thereby strengthening incentives to work, produce, and invest in the future. The House plan both real- izes the job-promoting benefits of lower rates and ensures these re- ductions are revenue neutral through base broadening. Unlike President Obama’s proposal, the House plan would not penalize the nearly three quarters of America’s small businesses that file taxes as individuals by imposing higher individual rates that make it harder for these vital enterprises to compete. As President Obama repeatedly says, small businesses have been re- sponsible for two-thirds of the jobs created in the United States over the past 15 years, and almost 50 percent of small-business profits are taxed at the top two rates. Raising these rates means increasing taxes on the most successful job creators. Raising taxes on capital is another idea that purports to affect the wealthy but actually hurts all participants in the economy. Mainstream economics, not to mention common sense, teaches that raising taxes on any activity generally results in less of it. Econom- ics and common sense also teach that the size of a nation’s capital stock—the pool of saved money available for investment and job creation—has an effect on employment, productivity, and wages.tjames on DSK6SPTVN1PROD with REPORTS Tax reform should promote savings and investment because more VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00137 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 130 savings and more investment mean a larger stock of capital avail- able for job creation. That means more jobs, more productivity, and higher wages for all American workers. The negative effects of high tax rates on work, savings and in- vestment are compounded when a large mix of exemptions, deduc- tions and credits are added to the system. These tax preferences are similar to government spending—instead of markets directing economic resources to their most efficient uses, the government di- rects resources to politically favored uses, creating a drag on eco- nomic growth and job creation. In the worst cases, these tax subsidies literally take the form of spending through the tax code, because they take taxes paid by hardworking Americans and issue government checks to individ- uals and corporations who do not owe any taxes at all. In fact, President Obama’s corporate tax ‘‘reform’’ framework would expand this practice by transferring taxes paid by middle class Americans to the pockets of politically favored industries. Eliminating large tax subsidies would not be for the purpose of increasing total tax revenues. Instead, when offset by lower rates, it would have a doubly positive impact on the economy—it would stop diverting economic resources to less productive uses, while making possible the lower tax rates that provide greater incentives for economic growth. President Reagan’s tax reforms inaugurated an era of great pros- perity. It is time to reclaim his legacy and once again enact a fun- damental reform of the tax code as the final step in rebuilding the foundations for economic growth: spending restraint, reasonable and predictable regulations, sound money, and a simple tax code with low rates. GEOFF DAVIS. DAVID G. REICHERT. VERN BUCHANAN. LYNN JENKINS. KENNY MARCHANT. ERIK PAULSEN. PATRICK J. TIBERI. AARON SCHOCK. RICK BERG. ADRIAN SMITH. PETER J. ROSKAM. JIM GERLACH. TOM PRICE. KEVIN BRADY. CHARLES W. BOUSTANY, Jr. WALLY HERGER. TOM REED. DIANE BLACK. SAM JOHNSON. DEVIN NUNES.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00138 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • Reprioritizing Sequester Savings Last year, as the nation approached the statutory limit on how much it could legally borrow, the Obama administration asked Congress for a ‘‘clean piece of legislation’’ to increase the govern- ment’s legal borrowing authority without any spending cuts to match.9 House Republicans refused to give the President the blank check he requested. Instead, Speaker of the House John Boehner insisted that any increase in the debt ceiling be accompanied by a greater amount of spending reduction. Speaker Boehner made clear on May 9, 2011 that, ‘‘Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt au- thority the President is given.’’ 10 Once it became clear that Congress would not rubber-stamp his requested increase in the debt ceiling, President Obama announced that he would not accept a debt-ceiling deal that did not include large tax increases on American families and businesses.11 House Republicans succeeded in protecting hardworking tax- payers by preventing the President from securing a bill containing tax hikes. Instead, a bipartisan agreement was forged to achieve savings from limits on discretionary spending and to set in motion a framework to achieve additional savings. The Budget Control Act of 2011 [BCA] paired a $2.1 trillion increase in the public debt limit with equivalent deficit reduction over the ensuing 10 years. The BCA called for deficit reduction in three phases: 1. First, it established caps on discretionary spending, achieving approximately $917 billion in savings over 10 years. 2. Second, it established and called upon a Joint Select Com- mittee on Deficit Reduction (JSCDR) to produce legislation with at least an additional $1.2 trillion in deficit reduction. 3. Third, it established an automatic sequestration process to force spending reductions in the event the JSCDR did not produce a deficit-reduction bill or Congress refused to pass it. This ‘‘seques- ter’’ would result in immediate discretionary spending reductions effective January 2, 2013. Understanding each component of the BCA is critical to under- standing the fiscal impact of the law as a whole. The BCA’s pre- sequester spending caps reduced discretionary spending for fiscal year 2013 to a maximum of $1.047 trillion. Some, including Senate 9 Brian Patrick, ‘‘Debt Limit Tick Tock,’’ Blog Update, Office of Majority Leader Eric Cantor, August 1, 2011. http://majorityleader.gov/blog/2011/08/debt-limit-tick-tock.html. 10 Remarks by House Speaker John Boehner. Economic Club of New York. May 9, 2011. http://www.speaker.gov/News/DocumentSingle.aspx?DocumentID=240370. 11 Patrick, ‘‘Debt Limit Tick Tock.’’tjames on DSK6SPTVN1PROD with REPORTS (131) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 132 Majority Leader Harry Reid, are still insisting that House Repub- licans are obligated to pass fiscal year 2013 spending bills at these levels.12 But Congress is no longer operating in a pre-sequester world. Last November, the JSCDR announced that it could not reach agreement on a deficit-reduction bill by the statutorily required deadline, thus triggering the sequester. Congress is now operating in a post-sequester world one in which discretionary spending for fiscal year 2013 is capped at $949 billion, and defense spending will be cut by $55 billion, or 10 percent, in January 2013 unless Congress acts to replace this sequester by reprioritizing the sav- ings. These cuts would be devastating to America’s defense capabili- ties. Leaders of both parties agree that sequester savings should be reprioritized. On August 4, 2011, then-director of the Office of Man- agement and Budget (now White House Chief of Staff) Jack Lew wrote that the sequester was not intended to be implemented: ‘‘Make no mistake: the sequester is not meant to be policy. Rather, it is meant to be an unpalatable option that all parties want to avoid.’’ 13 After the JSCDR’s failure, the President issued a veto threat against legislation overturning the sequester unless offset. The President called on Congress to develop an alternative: The only way these spending cuts will not take place is if Con- gress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion. That’s exactly what they need to do. That’s the job they promised to do. And they’ve still got a year to figure it out.14 The Joint Select Committee on Deficit Reduction While both parties have expressed their desire to avoid the con- sequences of the sequester, there is profound disagreement over how. This disagreement was evident in the JSCDR’s failure to produce a deficit-reduction bill last year. Despite the good-faith effort on the part of committee Repub- licans to avoid the sequester (and, by extension, to avoid its dis- proportionate impact on defense), the negotiations exposed a funda- mental lack of seriousness by some in Washington regarding the need to control government spending and address the structural drivers of the debt. As JSCDR Co-Chairman Jeb Hensarling made clear, Democrats on the committee ‘‘were unwilling to agree to any- thing less than $1 trillion in tax hikes—and unwilling to offer any structural reforms to put our health care entitlements on a perma- nently sustainable basis.’’ 15 Committee Democrats refused to address the problem, so the problem remains. Therefore, the immediate question of how to 12 Naftali Bendavid, ‘‘Fight Breaks Out Over 2013 Budget Cuts,’’ Wall Street Journal, March 14, 2012. http://blogs.wsj.com/washwire/2012/03/14/fight-breaks-out-over-2013-budget-cuts/. 13 Jack Lew, ‘‘Security Spending in the Deficit Agreement,’’ August 4, 2011. http:// www.whitehouse.gov/blog/2011/08/04/security-spending-deficit-agreement (accessed March 19, 2012). 14 Statement by the President on the Supercommittee, November 21, 2011, the White House. http://www.whitehouse.gov/the-press-office/2011/11/21/statement-president-supercommittee.tjames on DSK6SPTVN1PROD with REPORTS 15 Hensarling, Jeb. ‘‘Why the Super Committee Failed,’’ Wall Street Journal, November 22, 2011. http://online.wsj.com/article/SB10001424052970204531404577052240098105190.html. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00140 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 133 reprioritize sequester savings—and the larger challenge of averting a debt-fueled economic crisis—have become central to this year’s budget debate during this year’s budget season. The President’s Fiscal Year 2013 Budget The President’s fiscal year 2013 budget calls on Congress to re- place the sequester, but it does not make a specific proposal to turn the sequester off. It assumes that the sequester does not occur, but it does not lay out a specific path forward to avoid its con- sequences. The President’s budget includes tax increases and spending cuts (including a $487 billion reduction in defense spend- ing), which it claims are enough to offset the sequester—but it in- cludes a net spending increase that consumes nearly all of its claimed deficit reduction. This approach is deeply flawed, for three reasons. First, it im- poses a net tax increase on American families and businesses of $2.0 trillion. Washington’s fiscal imbalance is overwhelmingly driv- en by runaway spending, not insufficient tax revenue, and reducing the deficit by taking more from hardworking Americans would sim- ply slow the economy, reduce job opportunities, and ultimately prove counterproductive as a deficit-reduction strategy. Second, despite the large tax increase, the President’s budget also contains a net spending increase of $1.4 trillion, for a total of only $605 billion in deficit reduction. The rest of the President’s deficit-reduction claims are based on discredited budget gimmicks, including almost $1 trillion in ‘‘savings’’ that come from projecting current wartime spending in Iraq and Afghanistan out for the next 10 years, then proposing not to spend that money, even though it was never requested and never going to be spent. And third, much of the President’s actual spending reduction comes from cutting too deeply into the Defense Department. Al- though the President’s budget does not cut defense as deeply as the sequester would, these cuts would still jeopardize the capability of the U.S. military. The Senate’s Lack of a Budget It has been three years since the Senate passed a budget, and the legal deadline for passing a congressional budget resolution this year is fast approaching. Yet there has been no indication that Senator Reid plans to put forward an alternative plan for prioritizing spending, much less for averting the sequester. Instead, he continues to insist that Congress is still operating in a pre-se- quester world, even though the President’s own budget admits that ‘‘the sequester was triggered and will take effect in January 2013 if no action is taken.’’ 16 Senator Reid’s approach has been the very definition of inaction. There is a better way forward. 16 ‘‘Fiscal Year 2013 Budget of the U.S. Government,’’ Office of Management and Budget,tjames on DSK6SPTVN1PROD with REPORTS February 2012. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/ budget.pdf. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00141 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 134 The Path to Prosperity Approach: Reprioritize Savings Through Reconciliation This budget reprioritizes sequester savings to focus on the prob- lem, which is government spending, and to protect national secu- rity from deep and indiscriminate cuts. It achieves these goals by giving six House committees reconciliation instructions to produce actual legislation that achieves the sequester savings without the haphazard cuts that the sequester entails. How Reconciliation Works The 1974 Budget Act provides Congress with a special procedure to give expedited consideration to bills enacting the spending, rev- enue, and debt policies contained in the budget resolution. To trig- ger these expedited procedures, the budget resolution must include reconciliation instructions calling on specific committees to achieve specified amounts of savings in programs within their jurisdictions. The committees choose which programs to address and which poli- cies to adopt. Reconciliation in the Fiscal Year 2013 Budget Resolution This budget gives reconciliation instructions to six committees Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform, and Ways and Means that in aggregate would produce at least $18.5 billion of deficit reduction in the first year, $129.1 billion over the first five years, and $331.4 billion over the first 10 years.17 17 Because there is overlapping jurisdiction for some of these committees and the same savingstjames on DSK6SPTVN1PROD with REPORTS are reconciled to more than one committee, the net savings amount to $18.4 billion in the first year, $116.3 billion over five years, and $261.5 billion over 10 years. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00142 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 135tjames on DSK6SPTVN1PROD with REPORTS Insert offset folio 153 here 73320.034 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00143 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 136 Ultimately, the committees will be responsible for determining how to meet their reconciliation instructions. But savings could be achieved in the areas of making pensions for federal workers more like those for workers in the private sector, repealing recent expan- sions of the federal role in financial services, saving money in health care, means-testing entitlements, and reforming the medical liability system. This budget provides a clear solution that would be implemented quickly to replace the sequester. It does so by using an expedited procedure to reduce lower-priority spending. This solution would cut through the gridlock in Washington to start eliminating exces- sive autopilot spending immediately. It would protect taxpayers, and it would shield the U.S. military from a crippling, 10 percent across-the-board reduction in its funding. Unfortunately, the House cannot unilaterally implement this so- lution—and the Senate Democratic leadership’s only plan has been to oppose solutions put forward in the House. U.S. troops and their families should not have to suffer because the Democratic Party’s leaders refuse to lead. House Republicans will continue to show a way forward by directly addressing the nation’s most urgent fiscal and economic challenges. It is not too late for Americans to choose a better path.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00144 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • The Long-Term Budget Outlook As noted previously, the Federal budget trends of the next 10 years, daunting as they are, reflect only the first surge of spending and debt that threaten the government’s fiscal stability and the economy’s potential for growth. Beyond that budget window, condi- tions continue to worsen, driven by unsustainable rates of spending growth and promises of government benefits that cannot be kept. Therefore, Congress must examine the longer-term effects of its fis- cal policy choices. The Congressional Budget Office [CBO] has conducted such an analysis of the policies in this budget.18 It shows that the reforms outlined in this proposal would put the Federal budget on the path to balance and the American economy on the path to prosperity. The discussion below describes these long-term effects and com- pares them to those likely to result from the President’s budget. Government Spending Under the President’s budget, as re-estimated by CBO, the Fed- eral Government will spend $45.4 trillion over the next decade. Government spending runs at record post-World War II levels, never falling below 22.5 percent of the economy in this decade.19 Beyond that point, the President’s budget not only fails to curb the unsustainable spending trajectory—it makes matters worse. According to the Office of Management and Budget’s ‘‘Analytical Perspectives’’ for the President’s fiscal year 2013 budget, the Presi- dent’s path allows the Federal Government’s fiscal position to ‘‘gradually deteriorate’’ after 2022.20 18 See CBO’s Long-Term Analysis of a Budget Proposal by Chairman Ryan: http://cbo.gov/ sites/default/files/cbofiles/attachments/03-RyanlSpecifiedlPathsl2.pdf. 19 ‘‘An Analysis of the President’s 2013 Budget,’’ Congressional Budget Office, March 2012. http://cbo.gov/publication/43083. 20 ‘‘Fiscal Year 2013 Budget of the U.S. Government: Analytical Perspectives,’’ Office of Man- agement and Budget, February 2012. http://www.whitehouse.gov/sites/default/files/omb/ budget/fy2013/assets/spec.pdf.tjames on DSK6SPTVN1PROD with REPORTS (137) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00145 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 138 CBO has not directly estimated the long-term impact of the President’s budget. But the ‘‘alternative fiscal scenario’’ presented in CBO’s The Long-Term Budget Outlook (June 2011) is similar, but not identical to the President’s policy.21 (The alternative fiscal scenario differs from CBO’s standard ‘‘current law baseline’’ projec- tion. The current law baseline assumes that everything scheduled to occur in law—including significant changes in spending or tax laws, such as a lapse of the 2001 and 2003 tax rates—will occur as expected. The alternative fiscal scenario, by contrast, assumes Congress will continue various spending and tax policies that it has generally extended in the past.) Under this alternative fiscal sce- nario projection, CBO estimates mandatory spending will soon crowd out all other priorities in the Federal budget. Borrowing and spending by the public sector will crowd out investment and growth in the private sector. In the years ahead, government spending will skyrocket to record levels that a free economy simply cannot sus- tain.tjames on DSK6SPTVN1PROD with REPORTS 21 See the CBO June 2011 Long-Term Budget Outlook at http://cbo.gov/publication/41486 for a description of the Alternative Fiscal Scenario. [GPO: Insert Figure 3 here] Insert offset folio 157 here 73320.035 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00146 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 139 This budget, The Path to Prosperity, charts a brighter future. With responsible spending cuts now and structural reforms of gov- ernment spending programs going forward, the budget ensures gov- ernment spending remains on a sustainable path. Government spending will fall to its post-war historical norm of 20 percent of the economy by 2015. Within this fiscal restraint, the budget never- theless maintains or increases funding levels for government’s core responsibilities and advance national priorities—albeit at a more sustainable rate. As the economy grows, government spending as a share of the economy will steadily recede over the decades ahead. Deficits When he first took office, the President promised to cut the def- icit in half by the end of his term. Four straight trillion-dollar defi- cits later, he hasn’t even come close. His latest budget projects a deficit of $1.3 trillion for fiscal year 2012 and a deficit near $1 tril- lion for fiscal year 2013.tjames on DSK6SPTVN1PROD with REPORTS Insert offset folio 160 here 73320.036 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00147 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 140 By contrast, this budget charts a sustainable path going forward, ultimately erasing the entire budget deficit. It brings the deficit below $800 billion in fiscal year 2013. Relative to the President’s budget, it reduces the deficit by $3.3 trillion over the next 10 years. And based on CBO estimates, it reaches balance in the years ahead, produces surpluses, and ultimately pays down the debt. This budget gets the deficit below 1 percent of GDP by 2016. By contrast, under the status quo, as measured by the alternative fis- cal scenario, the annual deficit would grow to nearly 15.5 percent of the entire U.S. economy by 2035.tjames on DSK6SPTVN1PROD with REPORTS Insert graphic folio 162 73320.037 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00148 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 141tjames on DSK6SPTVN1PROD with REPORTS Insert offset folio 165 here 73320.038 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00149 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 142 Debt By continuing Washington’s spending spree, the President’s budget adds $8.7 trillion to debt held by the public over the next decade. Publicly held debt as a share of the economy would in- crease from 68 percent to 76 percent—well past the level that economists warn is the tipping point for a fiscal crisis. After that, by his budget’s long-term projections, the publicly held debt would surge past 100 percent of GDP and continue to climb in the years ahead. Under the alternative fiscal scenario, which uses a more re- alistic baseline of current policies, CBO projects publicly held debt as a share of the economy to reach 96 percent of the economy in 2023, 128 percent in 2030, and 194 percent in 2040. The CBO has warned that ‘‘Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at af- fordable rates.’’ 22 The Path to Prosperity lifts the crushing burden of debt, making it possible for the economy to grow and for Americans to prosper. This budget would cut trillions of dollars from the debt relative to the current path in every year of CBO’s long-term analysis. In 2023, the debt would be more than 36 percent lower than would be the case under the status quo; 59 percent less in 2030; and 80 percent less in 2040. By 2050, this budget would reduce debt rel- ative to the size of the economy to only 10 percent and keep the nation on the path to a debt-free future.tjames on DSK6SPTVN1PROD with REPORTS 22 June 2011 Long-Term Budget Outlook. Insert offset folio 167 here 73320.039 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00150 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • Section-by-Section Description The concurrent resolution on the budget for a fiscal year estab- lishes an overall budgetary framework which includes: aggregate levels of total new budget authority and outlays; total revenues and the amount by which revenues should be changed; the surplus or deficit; new budget authority and outlays for each major functional category; the debt held by the public; and the debt subject to the statutory limit. SECTION 1. THE CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2013 Subsection (a), in as required by section 301(a) of the Congres- sional Budget and Impoundment Control Act of 1974, establishes the levels for fiscal year 2013, and each of the nine years following the budget year, fiscal years 2014 through 2022. For fiscal year 2013, the concurrent resolution on the budget re- ported by the Committee on the Budget establishes a ceiling on spending and a floor on revenue. Under the terms of section 301 of the Congressional Budget and Impoundment Control Act of 1974, this report sets an allocation of budget authority and outlays to the Committee on Appropriations of the House. That committee in turn suballocates that amount to its twelve subcommittees for spending on the various programs, projects and activities with the jurisdiction of the subcommittees. Allocations are also given to authorizing committees, those com- mittees with spending authority, though in addition to the fiscal year 2013 allocation to the Appropriations Committee, these au- thorizing committees may not spend more than the allocation for the budget year and over the 10-year period provided for by the concurrent resolution on the budget. Subsection (b) sets out the table of contents of the resolution. Title I—Spending and Revenue Levels SECTION 101. LEVELS AND AMOUNTS As required by section 301 of the Congressional Budget and Im- poundment Control Act of 1974, this section establishes the rec- ommended levels for revenue, reduction in revenue, total new budget authority, total budget outlays, surpluses or deficits, debt held by the public, and the debt subject to the statutory limit. The recommended level of revenue operates as a floor against which all revenue bills are measured pursuant to section 311 of the Budget Act.tjames on DSK6SPTVN1PROD with REPORTS (143) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00151 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 144 Similarly, the recommended levels of new budget authority and budget outlays serve as a ceiling on the consideration of subse- quent spending. The surplus or deficit levels reflect only on-budget outlays and revenue and do not reflect most outlays and receipts related to the Social Security program and certain United States Postal Service operations. The debt subject to statutory limit aggre- gates refers to the portion of gross Federal debt issued by the Treasury to the public or another government fund or account, whereas the debt held by the public is the amount of debt issued and held by entities or individuals other than the U.S. Govern- ment. SECTION 102. FUNCTIONAL CATEGORIES As further required by section 301(a) of the Budget Act, this sec- tion establishes the appropriate budgetary levels for fiscal year 2013, and for each of the fiscal years 2014 through 2022. The functional categories are as follows: 050 National Defense 150 International Affairs 250 General Science, Space, and Technology 270 Energy 300 Natural Resources and Environment 350 Agriculture 370 Commerce and Housing Credit 400 Transportation 450 Community and Regional Development 500 Education, Training, Employment, and Social Services 550 Health 570 Medicare 600 Income Security 650 Social Security 700 Veterans Benefits and Services 750 Administration of Justice 800 General Government 900 Net Interest 920 Allowances 950 Undistributed Offsetting Receipts 970 Overseas Contingency Operations/Global War on Ter- rorism and Related Activities Title II—Reconciliation SECTION 201. RECONCILIATION IN THE HOUSE OF REPRESENTATIVES As permitted by section 310 of the Congressional Budget Act of 1974, this concurrent resolution on the budget includes reconcili- ation instructions to specified committees of the House. These in- structions require those committees to submit legislative text to amend laws in their jurisdictions to achieve an amount of deficit reduction by a certain date. The various committee recommenda- tions are submitted to the Committee on the Budget, which then binds them together and votes whether to report the resulting bill to the House. The Committee on the Budget may only report the legislation submitted to it. The Committee may not make any sub-tjames on DSK6SPTVN1PROD with REPORTS stantive changes. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00152 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 145 Section 201(a) directs six authorizing committees to transmit changes in programs within their jurisdiction to the Committee on the Budget by April 27, 2012. Section 201(b) provides that the committees instructed to submit legislative language to the Committee on the Budget are as follows: the Committee on Agriculture, the Committee on Energy and the Commerce, the Committee on the Financial Services, the Com- mittee on the Judiciary, the Committee on Oversight and Govern- ment Reform, and the Committee on Ways and Means. (See rec- onciliation instructions for each committee in Table 9.) The reconciliation instructions in this concurrent resolution in- struct each committee to reduce the deficit by a specified amount. Deficits are calculated by the net effect of changes in outlays and revenue a measure may make. Though the committees receiving instructions determine the pol- icy and program changes, outlay savings must be in the direct spending category. For instance, a reduction in an authorization level for spending subject to annual appropriations is categorized as authorizing future discretionary spending and would not be esti- mated as producing direct spending savings as the reconciliation process requires. In addition, clause 7 of rule XXI of the Rules of the House of Representatives prohibits the consideration of a con- current resolution on the budget that includes instructions for a reconciliation bill that has the net effect of increasing outlays. Similarly, the committee receiving reconciliation instructions de- termines the policy as to how revenue changes are made. A submis- sion to the Committee on the Budget may increase or decrease rev- enue, depending on the instruction. The committees determine the changes in law necessary to achieve the specified amount of deficit reduction for the period of fiscal years 2012 through 2013, for the period of fiscal years 2012 through 2017, and for the period of fiscal years 2012 through 2022. SECTION 202. DIRECTIVE TO THE COMMITTEE ON THE BUDGET OF THE HOUSE OF REPRESENTATIVES Section 202(a) directs the Committee on the Budget to report a bill with the directives described in subsection (b). Subsection (b) sets out guidelines for the legislation the concur- rent resolution directs the Committee on the Budget to report. Those guidelines include replacing the sequestration required under section 251A of the Balanced Budget and Emergency Deficit Control Act of 1985. The reforms included in the measure the Committee on the Budget is directed to report only take effect upon enactment of the reconciliation bill referred to in section 201. Title III—Recommended Levels for Fiscal Years 2030, 2040, and 2050 SECTION 301. POLICY STATEMENT ON LONG-TERM BUDGETING This section sets out recommended budgetary levels for certain budget aggregates for each of fiscal years 2030, 2040, and 2050 as a percentage of the gross domestic product of the United States astjames on DSK6SPTVN1PROD with REPORTS follows: VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00153 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 146 Federal Revenues Fiscal Year 2030: 19 percent Fiscal Year 2040: 19 percent Fiscal Year 2050: 19 percent Budget Outlays Fiscal Year 2030: 20.25 percent Fiscal Year 2040: 18.75 percent Fiscal Year 2050: 16 percent Deficit Fiscal Year 2030: 1.25 percent Fiscal Year 2040: ¥.25 percent Fiscal Year 2050: ¥3 percent Debt Held by the Public Fiscal Year 2030: 53 percent Fiscal Year 2040: 38 percent Fiscal Year 2050: 10 percent Title IV—Reserve Funds SECTION 401. RESERVE FUND FOR THE REPEAL OF THE 2010 HEALTH CARE LAWS This section permits the Chair of the Committee on the Budget to revise allocations of spending authority, provided to committees of the House, and to adjust other budgetary enforcement levels for a measure that repeals the Patient Protection and Affordable Care Act (Public Law 111–148) and the Health Care and Education Rec- onciliation Act of 2010 (Public Law 111–152). Those measures are the health care bills enacted into law in 2010. SECTION 402. DEFICIT-NEUTRAL RESERVE FUND FOR THE SUSTAINABLE GROWTH RATE OF THE MEDICARE PROGRAM This section permits the Chair of the Committee on the Budget to revise the allocations of spending authority provided to applica- ble committees and to adjust other budgetary enforcement levels in this resolution for a measure amending or superseding the system for updating payments under section 1848 of the Social Security Act, as long as the measure is deficit-neutral for the period of fiscal years 2013 through 2022. SECTION 403. DEFICIT-NEUTRAL RESERVE FUND FOR REVENUE MEASURES This section permits the Chair of the Committee on the Budget to revise the allocations of spending authority provided to the Com- mittee on Ways and Means for legislation that causes a decrease in revenue. The Chair of the Committee on the Budget may adjust the allocations and aggregates of this concurrent resolution if the measure would not increase the deficit over fiscal years 2013 through 2022. This concurrent resolution on the budget allows for a certaintjames on DSK6SPTVN1PROD with REPORTS amount of revenue loss from projected levels, but only for the poli- VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00154 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 147 cies specified in section 503. This section allows additional net rev- enue reductions for a measure not specified in that section if it de- creases outlays by the same amount over the ten-year period of fis- cal years 2013 through 2022. SECTION 404. DEFICIT-NEUTRAL RESERVE FUND FOR RURAL COUNTIES AND SCHOOLS This section provides for a reserve fund that accommodates legis- lation making changes to the Payments in Lieu of Taxes Act of 1976 (Public Law 94–565), or that reauthorizes the Secure Rural Schools and Community Self-Determination Act (Public Law 106– 393), to the extent the legislation does not increase the deficit or direct spending in fiscal year 2013, fiscal years 2013 through 2017, or fiscal years 2013 through 2022. These laws provide economic as- sistance to States and counties containing National Forest System lands and public domain lands managed by the Bureau of Land Management for the benefit of public schools, roads, and other pur- poses. SECTION 405. DEFICIT-NEUTRAL RESERVE FUND FOR SURFACE TRANSPORTATION REAUTHORIZATION This section allows the Chair of the Committee on the Budget to revise the levels of the resolution for any measure that reauthor- izes surface transportation programs so long as such measure maintains the solvency of the Highway Trust Fund and is deficit- neutral for the period of fiscal years 2013 through 2022. Title V—Budget Enforcement SECTION 501. ADVANCE APPROPRIATIONS Subsection (a) establishes a point of order against providing ap- propriations for fiscal year 2014, unless they fall into certain speci- fied exceptions. Under this rule, advance appropriations are al- lowed for fiscal years following that fiscal year. Subsection (b) provides for the list of excepted programs that may receive advance appropriations. Those accounts are referred to in this report in the section designated as ‘‘Accounts Identified for Advance Appropriations.’’ Subsection (c) specifically sets a limit on the amount of total al- lowable advance appropriations for fiscal year 2014. It allows advance appropriations of up to $54.462 billion for fiscal year 2014 for Veterans Medical Services, Veterans Medical Support and Compliance, and Veterans Medical Facilities accounts of the Veterans Health Administration. It also allows up to $28.852 billion for other programs named in this report. Subsection (d) defines advance appropriations as any new discre- tionary budget authority provided in a bill or joint resolution mak- ing general or continuing appropriations for fiscal year 2014.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00155 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 148 SECTION 502. CONCEPTS AND DEFINITIONS This section permits the Chair of the Committee on the Budget to adjust levels and allocations in this budget resolution upon en- actment of legislation changing concepts or definitions. SECTION 503. ADJUSTMENTS OF AGGREGATES AND ALLOCATIONS This section sets out a special enforcement procedure for meas- ures reducing revenue. This concurrent resolution on the budget sets out a revenue floor as required by section 301(a)(2) of the Con- gressional Budget Act of 1974. Normally, any measure affecting revenue that causes revenue levels to be below that floor would be subject to a point of order. This section establishes a special adjust- ment process for certain revenue measures that may cause a net revenue loss relative to the Congressional Budget Office (CBO) baseline, but the aggregate level of revenue loss caused by those specified measures may not drop the level below the revenue floor. Subsection (a) states that the baseline revenue levels for enforc- ing this concurrent resolution are those contained in the March 2012 CBO baseline. Hence any measure decreasing revenue rel- ative to that baseline violates the terms of the concurrent resolu- tion unless specifically listed in subsection (b). Subsection (b) specifies the revenue measures allowed to cause revenue loss relative to the above mentioned CBO baseline and permits the Chairman of the Committee on the Budget to make ad- justments to aggregates and allocations of the concurrent resolu- tion for their budgetary effects: • Extending the Economic Growth and Tax Relief Reconcili- ation Act of 2001 • Extending the Jobs and Growth Tax Relief Reconciliation Act of 2003 • Adjusting the Alternative Minimum Tax exemption amounts to prevent a larger number of taxpayers as compared with tax year 2008 from being subject to the Alternative Min- imum Tax or of allowing the use of nonrefundable personal credits against the Alternative Minimum Tax, or both as appli- cable • Extending the estate, gift, and generation-skipping trans- fer tax provisions of Title III of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 • Establishing a 20 percent deduction in income to small businesses • Establishing or amending trade agreements • Repealing the tax increases in the Patient Protection and Affordable Care Act and the Health Care and Education Af- fordability Reconciliation Act of 2010 • Reforming the tax code and lowering tax rates • Reforming the Patient Protection and Affordable Care Act [PPACA] and the Health Care and Education Affordability Reconciliation Act of 2010 [HERA], which allows a revenue ad- justment, but only to the extent measures are deficit neutral in the fiscal years 2013 through 2022. To the extent revenue increases are used to achieve deficit neutrality during this pe-tjames on DSK6SPTVN1PROD with REPORTS riod, those revenue raisers may only be either (or both): VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00156 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 149 (1) Repealing the individual mandate included in PPACA/ HERA; (2) Modifying the subsidies to purchase health insurance as set in PPACA/HERA. It is the intent of this concurrent resolution on the budget that measures which extend the Economic Growth and Tax Relief Rec- onciliation Act of 2001 and the Jobs and Growth Tax Relief Rec- onciliation Act of 2003 are for provisions included in those laws as originally enacted. The subparagraph providing for adjustments related to tax re- form is intended for comprehensive tax reform. Comprehensive tax reform includes those reforms outlined in the letter from Rep- resentative Dave Camp, Chair of the Ways and Means Committee to Representative Paul Ryan, Chair of the Committee on the Budg- et dated March 1, 2012. Subsection (c) sets out a procedure to facilitate the consideration of legislation subjecting direct spending to annual appropriations. Under current law, there are impediments to changing direct spending to discretionary spending since if the former is elimi- nated, the purpose of spending is also eliminated on the direct spending side of the budget. Under current practice, if the intent is to preserve the purpose, but authorize the program and subject it to annual appropriations, the Committee on Appropriations would have to find additional resources within its section 302(a) al- location (as required to be set in the report on the budget resolu- tion by section 301(e)(2)(F) of the Congressional Budget Act of 1974). Under the terms of this subsection, should an authorizing com- mittee want to retain the purpose of a direct spending program, but determines it should be subject to annual appropriations, it can, at the time it eliminates the direct spending, authorize appro- priations for the program. If that elimination of the direct spending and authorization of appropriations is enacted, the Chair of the Committee on the Budget may increase the 302(a) allocation of budgetary resources to the Committee on Appropriations by an amount up to the authorized level of appropriations for the same purpose in fiscal year 2013. This rule effectively holds the Committee on Appropriations harmless if it appropriates money under the terms of that author- ization because the allocation under section 302(a) set in this re- port is adjusted. Subsection (d) specifies that the chair of the Committee on the Budget makes the determinations of the levels and adjustments provided for in this concurrent resolution on the budget. SECTION 504. LIMITATION ON LONG-TERM INCREASES IN SPENDING Subsection (a) establishes a point of order against the consider- ation of measures increasing direct spending by $5 billion or more for any 10-year period within 40 years starting in fiscal year 2023. Subsection (b) explains that there are four consecutive ten-year periods as referred to in subsection (a) which would be as follows: Fiscal years 2023 through 2032; Fiscal years 2033 through 2042;tjames on DSK6SPTVN1PROD with REPORTS Fiscal years 2043 through 2052; VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00157 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 150 Fiscal years 2053 through 2062. SECTION 505. BUDGETARY TREATMENT OF CERTAIN TRANSACTIONS Subsection (a) provides that the administrative expenses of the Social Security Administration and the United States Postal Serv- ice are reflected in the allocation to the Committee on Appropria- tions. This language is necessary to ensure that the Committee on Appropriations retains control of administrative expenses through the annual appropriations process. Subsection (b) provides for a special rule stating the allocation to the Committee on Appropriations of the House is enforced under the Congressional Budget Act of 1974 using estimates of the budg- etary effects of a measure and includes any off-budget discretionary amounts. Subsection (c) allows the Chair of the Committee on the Budget to adjust the spending or revenue levels of this concurrent resolu- tion for legislation, if reported by the Committee on Oversight and Government Reform, to reform the Federal retirement system. The Chair is permitted to make adjustments only if a measure would not cause an increase in the deficit in fiscal year 2013 and fiscal years 2013 through 2022. SECTION 506. APPLICATION AND EFFECT OF CHANGES IN ALLOCATIONS AND AGGREGATES Subsection (a) details the allocation and aggregate adjustment procedures required to accommodate legislation provided for in this resolution. It provides that the adjustments apply while the legisla- tion is under consideration and take effect upon enactment of the legislation. In addition, the subsection requires the adjustments to be printed in the Congressional Record. Subsection (b) requires, for purposes of enforcement of the con- current resolution, aggregate and allocation levels resulting from adjustments made pursuant to the terms of this resolution have the same effect as if adopted in the originally adopted aggregates and allocations. Subsection (c) provides an exemption for legislation for which the Chair of the Committee on the Budget has made adjustments in the allocations or aggregates of the resolution and that complies with this Concurrent Resolution on the Budget. By such an exemp- tion, such legislation is subject to neither the Cut-As-You-Go point of order (clause 10 of rule XXI of the Rules of the House of Rep- resentatives) nor section 504 of the concurrent resolution on the budget (the long-term spending point of order). SECTION 507. CONGRESSIONAL BUDGET OFFICE ESTIMATES Section (a) provides specific authority for the Chair or Ranking Member of the Committee on the Budget to request a supplemental estimate for any program affecting or establishing Federal loans or loan guarantees. Under current law, such a measure would be scored on a ‘‘net present value’’ basis under the terms of the Fed- eral Credit Reform Act found in Title V of the Congressional Budg- et Act of 1974. The supplemental estimate would be scored usingtjames on DSK6SPTVN1PROD with REPORTS a ‘‘fair value’’ basis which generally incorporates a more realistic VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00158 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 151 market risk factor. It also allows the Chair of the Committee on the Budget to use the supplemental estimate for enforcing compli- ance with the resolution. Section (b) provides that any increases in receipts from reforms of the National Flood Insurance Program, if included in a reconcili- ation bill considered under the terms of this concurrent resolution, are to be used for deficit reduction. SECTION 508. BUDGET RULE RELATING TO TRANSFERS FROM THE GEN- ERAL FUND OF THE TREASURY TO THE HIGHWAY TRUST FUND THAT INCREASE PUBLIC INDEBTEDNESS This section provides that for purposes of budget enforcement, transfers of funds from the general fund of the Treasury to the Highway Trust Fund are to be counted as new budget authority and outlays equal to the amount of the transfer in the fiscal year the transfer occurs. This budget rule is not relevant for, nor is it applied to, transfers of revenue under current law from the general fund to the Highway Trust Fund pursuant to Section 9503 of Title 26 of the United States Code. SECTION 509. SEPARATE ALLOCATION FOR OVERSEAS CONTINGENCY OPERATIONS/GLOBAL WAR ON TERRORISM Subsection (a) provides for a separate section 302(a) allocation of the Congressional Budget Act of 1974, and set out in this report, to the Committee on Appropriations for overseas contingency oper- ations and the global war on terrorism (OCO/GWOT). For purposes of enforcing section 302(f) of the Congressional Budget Act of 1974 the ‘‘first fiscal year’’ and the ‘‘total fiscal years’’ refer to fiscal year 2013 only. The separate allocation is the exclusive allocation for OCO/GWOT under section 302(a). It states that any provision des- ignated as such under section 251(b)(2)(A)(ii) of the Balanced Budg- et and Emergency Deficit Control Act of 1985, which raises the statutory spending limits by the amount so designated, also will be counted toward the separate OCO/GWOT allocation and not to the general section 302(a) allocation. Subsection (b) provides that the current procedure of adjusting the general 302(a) allocation under section 314 of the Budget Act is no longer in effect since with the special allocation it is not nec- essary. SECTION 510. EXERCISE OF RULEMAKING POWERS Subsection (a) provides for general technical application of the legislative text of the resolution. Subsection (b) clarifies that certain provisions of H. Res. 5 (112th Congress) are no longer applicable. Title VI—Policy SECTION 601. POLICY STATEMENT ON MEDICARE Subsection (a) sets out findings. Subsection (b) states that the policy of the Concurrent Resolutiontjames on DSK6SPTVN1PROD with REPORTS on the Budget is ‘‘to protect those in and near retirement from any VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00159 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 152 disruptions to their Medicare benefits and offer future beneficiaries the same health care options available to Members of Congress.’’ Subsection (c) sets out the assumptions of the Concurrent Resolu- tion on the Budget for the parameters of future Medicare reforms. SECTION 602. POLICY STATEMENT ON SOCIAL SECURITY Subsection (a) sets out findings. Subsection (b) states the Concurrent Resolution on the Budget’s policy on Social Security. SECTION 603. POLICY STATEMENT ON DEFICIT REDUCTION THROUGH THE CANCELLATION OF UNOBLIGATED BALANCES Subsection (a) sets out several findings. Subsection (b) directs congressional committees through their oversight activities to identify and achieve savings through the can- cellation or rescission of unobligated balances that neither abrogate contractual obligations of the Federal Government nor reduce or disrupt Federal commitments under programs such as Social Secu- rity, veterans’ affairs, national security, and Treasury authority to finance the national debt. Subsection (c) provides that the Congress, with the assistance of the Government Accountability Office, the Inspectors General, and other appropriate agencies should make it a high priority to review unobligated balances and identify savings for deficit reduction. While there is year-to-year variability, unobligated balances have generally been trending upwards over the past ten years, from $253 billion at the end of fiscal year 2000 to $725 billion at the end of fiscal year 2011. According to the Office of Management and Budget, federal agencies will have an estimated $698 billion in un- obligated balances at the close of fiscal year 2013, though agencies tend to overestimate their rate of obligations. Legislation intro- duced by Dr. Tom Price of Georgia (H.R. 1111) would rescind $45 billion in unobligated discretionary funds within 60 days of enact- ment. CBO has informally estimated that such a measure could re- duce spending by approximately $22 billion. The large sums of unobligated balances indicate that there are major opportunities for savings to reduce the deficit. Additional in- vestigation is necessary to determine what portion of these antici- pated unobligated balances can be cancelled or rescinded for deficit reduction without abrogating the Federal Government’s contractual obligations or reducing or disrupting federal commitments under high priority programs and Treasury’s authority to finance the na- tional debt. A reasonable goal would be to reduce unobligated balances by 10 percent, excluding Departments of Defense, Treasury, Veterans’ Af- fairs, and the Social Security Administration, to achieve savings for deficit reduction. SECTION 604. POLICY STATEMENT ON WASTE, FRAUD, ABUSE Subsection (a) sets out findings. Subsection (b) states that each Congressional Committee shall astjames on DSK6SPTVN1PROD with REPORTS part of its annual Views and Estimates letter to the Committee on VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00160 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
  • 153 the Budget submit recommendations for reductions in spending that result from that committee’s oversight activities. Title VII—Sense of House Provisions SECTION 701. SENSE OF THE HOUSE REGARDING THE IMPORTANCE OF CHILD SUPPORT ENFORCEMENT This sense of the House expresses the sense that the authorizing committees are encouraged to ensure that States have the re- sources to collect child support owed to families and then to pass 100 percent of support on to families without financial penalty.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00161 Fmt 6601 Sfmt 6602 E:HROCHR421.XXX HR421
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  • The Congressional Budget Process The spending and revenue levels established in the budget reso- lution are executed through two parallel, but separate, mecha- nisms: allocations to the appropriations and authorizing commit- tees; and, when necessary, reconciliation directives to the author- izing committees. As required under section 302(a) of the Congressional Budget and Impoundment Control Act of 1974, the discretionary spending levels established in the budget resolution are allocated to the Ap- propriations Committee and the direct spending levels are allocated to each of the authorizing committees with direct spending author- ity of each House of Congress. These allocations appear in the re- port accompanying the budget resolution, and they are enforced through points of order (see the section of this report titled: ‘‘En- forcing the Budget Resolution’’). Amounts provided under ‘‘current law’’ encompass programs that affect direct spending—entitlements and other programs that have spending authority or offsetting re- ceipts. Amounts subject to discretionary action refer to programs that require subsequent legislation to provide the necessary spend- ing authority. Amounts provided under ‘‘reauthorizations’’ reflect amounts assumed to be provided in subsequent legislation reau- thorizing expiring direct spending programs. Allocations of budget authority and outlays are provided for the budget year (fiscal year 2013), and the 10-year period (fiscal years 2013 through 2022). Section 302 of the Congressional Budget and Impoundment Control Act of 1974 (as modified by the Balanced Budget Act of 1997) requires that allocations of budget authority be provided in the report accompanying the budget resolution for the 1st fiscal year and at least the 4 ensuing fiscal years (except for the Committee on Appropriations, which receives an allocation only for the budget year). COMMITTEES OF AUTHORIZATION The report (or the joint statement of managers in the instance of a conference report) accompanying the concurrent resolution on the budget allocates to the authorizing committees a sum of new budget authority along with the attendant outlays required to fund the direct spending within their jurisdiction. The committees may be allocated additional budget authority should increases in spend- ing be required in their jurisdiction. This occurs when the budget resolution assumes a new or expanded direct spending program. Such spending authority must be provided through subsequent leg- islation and is not controlled through the annual appropriations process.tjames on DSK6SPTVN1PROD with REPORTS (155) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00163 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 156 302(a) Allocations Because the spending authority for authorizing committees is multi-year or permanent, the allocations are established for the budget year commencing on October 1, and a 10-year total for fiscal years 2013 through 2022. Unlike the Committee on Appropriations, each authorizing com- mittee is provided a single allocation of new budget authority (di- vided between current law and expected policy action) not provided through annual appropriations. These committees are not required to file 302(b) allocations. Bills first effective in fiscal year 2013 are measured against the level for that year included in the fiscal year 2013 budget resolution and also the 10-year period of fiscal year 2013 through 2022. COMMITTEE ON APPROPRIATIONS The report accompanying the concurrent resolution on the budget allocates to the Committee on Appropriations a lump sum of discre- tionary budget authority assumed in the resolution and cor- responding outlays for a single fiscal year. 302(a) Allocations Because the spending authority for authorizing committees is multi-year or permanent, the allocations in the budget resolution are for the budget year, which is the fiscal year 2013 which com- mences on October 1, 2012, and a 10-year total for fiscal years 2013 through 2022. 302(b) Allocations Once a 302(a) allocation is provided to it by the concurrent reso- lution on the budget for a budget year, the Appropriations Com- mittee is required to divide the allocation among its subcommit- tees. Though the number of subcommittees has varied over time, for budget year 2013, there are twelve. The amount each sub- committee receives constitutes its suballocation pursuant to section 302(b) of the Congressional Budget Act of 1974. Each appropriation bill reported by a subcommittee providing budget authority for programs within its jurisdiction for the budget year must not breach this 302(b) suballocation. The sum of the sub- allocations must equal the 302(a) allocation provided, though an additional 302(b) suballocation may be made and assigned to the full Appropriations Committee. This additional suballocation must be an amount in the form of a positive whole number. Under section 302(c) of the Budget Act, Appropriations Acts may not be considered on the floor of the House before these 302(b) sub- allocations are made. The Congressional Budget Act of 1974 defines a ‘‘budget year’’ as the fiscal year starting in the calendar year in which a session of Congress first meets. Since the second session of the 112th Con- gress first met on January 5, 2012 (pursuant to Public Law 111– 289), for the purposes of this concurrent resolution on the budget, the budget year is fiscal year 2013. In general, bills, conference reports, joint resolutions, concurrenttjames on DSK6SPTVN1PROD with REPORTS resolutions, cease to exist at the end of each Congress (in the VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00164 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 157 House of Representatives). When a new Congress meets, though, the House extends rules from the previous Congress through a sim- ple House Resolution. In this way, the Budget Resolution is ex- tended into the new Congress. The budget year, thus, may change, but for purposes of enforcement, the first fiscal year for the budget resolution remains the same.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00165 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • Enforcing Budgetary Levels THE CONCURRENT RESOLUTION ON THE BUDGET The concurrent resolution on the budget is more than a planning document. The allocations of spending authority and the aggregate levels of both spending authority and revenues are binding on the Congress when it considers subsequent spending and tax legisla- tion. Legislation breaching the levels set forth in the budget resolu- tion is subject to points of order on the floor of the House of Rep- resentatives. The concurrent resolution is established pursuant to the Congressional Budget Act of 1974, which includes various re- quirements as to its content and enforcement. While a budget reso- lution sets levels of spending, revenue, deficits and debt, it also may include special procedures in order to enforce Congressional budgetary decisions. Any Member of the House may raise a point of order against any tax or spending bill that breeches the allocations and aggregate spending levels established in the budget resolution. If the point of order is sustained, the House is precluded from further consider- ation of the measure. Section 302(f) Section 302(f) of the Congressional Budget Act of 1974 prohibits the consideration of legislation that exceeds a committee’s alloca- tion of budget authority. For authorizing committees this section applies to the first fiscal year and the period of fiscal years covered by the budget resolution in force. For appropriations bills, however, it applies only to the first fiscal year. Section 303 Section 303 prohibits the consideration of spending and revenue legislation before the House has passed a concurrent resolution on the budget for a fiscal year. Measures that cause an increase or de- crease in revenue, or cause an increase in budget authority, in a fiscal year for which a budget resolution has not been adopted vio- late section 303(a). Section 303(a) does not apply to budget author- ity and revenue provisions first effective in a year following the first fiscal year to which a budget resolution would apply, or to ap- propriation bills after 15 May. Section 311 Section 311 prohibits the consideration of legislation that would cause a breach of the aggregate spending limits on budget author-tjames on DSK6SPTVN1PROD with REPORTS (163) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00171 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 164 ity and outlays, or that would cause revenue levels to fall below the revenue floor, established by the concurrent resolution on the budg- et. If a measure would cause budget authority or outlays to be greater than the ceiling established for the first fiscal year of a budget resolution, a section 311 violation occurs. If a measure would cause revenue to be lower than the revenue floor in the first fiscal year or the period of years of the budget resolution, a section 311 violation occurs. Section 311 does not apply to measures that provide budget authority but do not breach a committee’s 302(a) al- locations. BUDGET-RELATED PROVISIONS IN THE HOUSE Clause 7 of Rule XXI This clause prohibits the consideration of a concurrent resolution on the budget containing reconciliation directives (section 310 of the Congressional Budget and Impoundment Control Act of 1974) that would cause a net increase in direct spending. Clause 10 of Rule XXI House Resolution 5 established in the Rules of the House of Rep- resentatives a point of order against any bill, joint resolution, amendment, or conference report that would cause a net increase in direct spending. The rule, termed ‘‘Cut-as-you-go,’’ prohibits the consideration of legislation that increases direct spending over 5 years or 10 years, and requires spending increases to be offset by spending decreases over those time periods. Clause 4 of Rule XXIX This clause specifies that the Chair of the Committee on the Budget is responsible for providing authoritative guidance con- cerning the impact of a legislative propositions related to the levels of new budget authority, outlays, direct spending, and new entitle- ment authority. Section 3 of House Resolution 5 of the 112th Congress House Resolution 5 adopted the rules from the 111th Congress and incorporated additional provisions related to the budget proc- ess. This section requires that each general appropriations bill con- tain a ‘‘spending reduction’’ account, for which the level provided is a recitation of the amount by which, through the amendment process, the House has reduced spending in other portions of the bill and indicated that such savings should be counted toward spending reduction. It provides that any other amendment increas- ing spending must include an offset of an equal or greater value.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00172 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • Reconciliation Section 310 of the Congressional Budget Act of 1974 (2 U.S.C. 641) sets out a special procedure which allows a concurrent resolu- tion on the budget to direct any Congressional committee to produce legislation that changes budgetary levels. The Concurrent Resolution on the Budget for Fiscal Year 2013, as reported by the Committee on the Budget, provides for such a reconciliation bill. The concurrent resolution instructs six authorizing committees to transmit changes in law necessary to achieve certain direct spend- ing and revenue levels provided for in the budget resolution. They must submit legislative text and associated material to the Com- mittee on the Budget by April 27, 2012. A committee receiving a reconciliation directive must reduce the deficit in the following periods: fiscal years 2012 and 2013, 2012 through 2017, and 2012 through 2022. A committee may reduce the deficit through net reductions in spending or net increases in rev- enue. The committees may achieve the deficit reduction specified in any manner they wish for laws within their jurisdiction. In general, when a committee receives a reconciliation directive, it considers a bill to comply with the directive as it would any other bill, but the legislative text, along with related material, is sub- mitted to the Committee on the Budget instead of reported to the House. The Committee on the Budget then binds all the submis- sions together, votes on the combined measure, and reports it out of committee as a single bill. The committee may not amend the submitted legislative text during consideration in committee. It must report the language without substantive revision. A reconciliation bill is a privileged measure in the Senate: As dis- tinct from most Senate bills, it has a time limit of twenty hours of debate and does not require the sixty-vote supermajority to invoke ‘‘cloture,’’ a Senate procedure which limits debate on legislation. Hence passage of a reconciliation bill in the Senate only requires a simple majority. In the Senate, as a limitation on the content of a reconciliation bill, a provision that does not increase or decrease spending (or rev- enue) is considered extraneous. If found to be extraneous the provi- sion violates section 313 of the Congressional Budget Act of 1974, commonly known as the ‘‘Byrd Rule,’’ so named after its author, the late Senator Robert C. Byrd (WV). If the provision is found to violate the Byrd Rule, it is removed from the bill or conference re- port unless 60 Senators vote to waive the rule. The committees receiving reconciliation instructions pursuant to this concurrent resolution, and which must submit legislative lan-tjames on DSK6SPTVN1PROD with REPORTS (165) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00173 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 166 guage and related material to the Committee on the Budget, are as follows: the Committee on Agriculture, the Committee on En- ergy and Commerce, the Committee on Financial Services, the Committee on Judiciary, the Committee on Oversight and Govern- ment Reform, and the Committee on Ways and Means. As noted above, the reconciled committees determine the content of legislation. The reconciliation instructions in this concurrent res- olution are designed to replace the deficit reduction that would re- sult from $78 billion of the $98 billion sequestration of discre- tionary budget authority mandated to occur on January 2, 2013. The goal of the instructions is to achieve this deficit reduction as rapidly as possible. Due to the challenge of achieving mandatory savings quickly and the importance of achieving the deficit reduc- tion as quickly as possible, the instruction calls on committees to report no later than April 27, 2012. The Committee expects the House will act promptly on this legislation. In addition, to ensure the deficit reduction is achieved rapidly, the instructions include the current fiscal year, fiscal year 2012, ending on September 30, 2012. In developing these instructions, the Committee on the Budget made certain assumptions, including quick enactment of the rec- onciliation legislation and, based on preliminary discussions with the Congressional Budget Office, an effective date of July 1, 2012 for the policies contained in the reconciliation legislation. The Agri- culture Committee, for example, is instructed to achieve $8.2 bil- lion in deficit reduction for fiscal years 2012–2013. While the Agri- culture Committee will ultimately determine how to achieve these savings, the Committee on the Budget assumed savings from re- pealing expansions enacted in the Supplemental Nutrition Assist- ance Program (SNAP) to be effective July 1, 2012.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00174 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • Accounts Identified for Advance Appropriations ACCOUNTS IDENTIFIED FOR ADVANCE APPROPRIATIONS FOR FISCAL YEAR 2014 (Subject to a General Limit of $28,852,000,000) Financial Services and General Government Payment to Postal Service Labor, Health and Human Services, and Education Employment and Training Administration Education for the Disadvantaged School Improvement Programs Special Education Career, Technical and Adult Education Transportation, Housing and Urban Development Tenant-based Rental Assistance Project-based Rental Assistance ACCOUNTS IDENTIFIED FOR ADVANCE APPROPRIATIONS FOR FISCAL YEAR 2014 (Subject to a Separate Limit of $54,462,000,000) Military Construction, Veterans Affairs VA Medical Services VA Medical Support and Compliance VA Medical Facilitiestjames on DSK6SPTVN1PROD with REPORTS (167) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00175 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  • Votes of the Committee Clause 3(b) of House Rule XIII requires each committee report to accompany any bill or resolution of a public character, ordered to include the total number of votes cast for and against on each roll call vote, on a motion to report and any amendments offered to the measure or matter, together with the names of those voting for and against. Listed below are the roll call votes taken in the Committee on the Budget on the Concurrent Resolution on the Budget for Fiscal Year 2013. On March 21, 2012 the Committee met in open session, a quorum being present. Mr. Garrett asked unanimous consent that the Chair be author- ized, consistent with clause 4 of House Rule XVI, to declare a re- cess at any time during the Committee meeting. There was no objection to the unanimous consent request. Chairman Ryan asked unanimous consent to dispense with the first reading of the budget aggregates, function levels, and other appropriate matter; that the aggregates, function totals, and other appropriate matter be open for amendment; and that amendments be considered as read. There was no objection to the unanimous consent requests. The committee adopted and ordered reported the Concurrent Resolution on the Budget for Fiscal Year 2013. The Committee on the Budget took the following votes: 1. An amendment offered by Representative Schwartz expressing a sense of the House as to how the Affordable Care Act affects Medicare and senior citizens. The amendment was not agreed to by a roll call vote of 13 ayes and 20 noes. ROLLCALL VOTE NO. 1 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) COLE (OK) X YARMUTH (KY)tjames on DSK6SPTVN1PROD with REPORTS (169) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00177 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 170 ROLLCALL VOTE NO. 1—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 2. An amendment offered by Representative Castor expressing a sense of the House on the effects of the Affordable Care Act relat- ing to prescription drug costs and other Medicare benefits for sen- ior citizens. The amendment was not agreed to by a roll call vote of 15 ayes and 21 noes. ROLLCALL VOTE NO. 2 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00178 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 171 ROLLCALL VOTE NO. 2—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 3. An amendment offered by Representative Blumenauer to in- crease budget authority and outlays for Function 400 to reflect in- creased funding for transportation, including roads, railroads and airports. Budget authority and outlays for Function 400 would increase by $50 billion in FY 2012 and outlays in the following amounts: $19.920 billion for fiscal year 2013, $16.210 billion for fiscal year 2014, $5.780 billion for fiscal year 2015, $2.350 billion for fiscal year 2016, $1.680 billion for fiscal year 2017, $1.350 billion for fis- cal year 2018, $0.600 billion for fiscal year 2019, $0.500 billion for fiscal year 2020, $0.400 billion for fiscal year 2021, $0.200 billion for fiscal year 2022. The amendment was not agreed to by a roll call vote of 16 ayes and 20 noes. ROLLCALL VOTE NO. 3 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00179 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 172 ROLLCALL VOTE NO. 3—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) 4. An amendment offered by Representative Kaptur to increase budget authority and outlays for Function 700 to establish an interagency Veterans Jobs Corps that will employ veterans. The budget authority for Function 700 would increase by: $1 bil- lion in fiscal year 2013 and outlays in the following amounts: $0.100 billion for fiscal year 2013, $0.225 billion for fiscal year 2014, $0.225 billion for fiscal year 2015, $0.225 billion for fiscal year 2016, $0.225 billion for fiscal year 2017. The amendment was not agreed to by a roll call vote of 17 ayes and 20 noes. ROLLCALL VOTE NO. 4 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) X McCLINTOCK (CA) X HONDA (CA) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00180 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 173 ROLLCALL VOTE NO. 4—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 5. An amendment offered by Representatives Van Hollen, Schwartz, Doggett, McCollum, Pascrell, Ryan (OH), and Bonamici expressing a sense of the House rejecting any tax increase for indi- viduals with incomes under $200,000 or married couples below $250,000 and extending the earned income tax credit as well as the child tax credit. The amendment was not agreed to by a roll call vote of 14 ayes and 21 noes. ROLLCALL VOTE NO. 5 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) X McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) WASSERMAN SCHULTZ (FL) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00181 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 174 ROLLCALL VOTE NO. 5—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 6. An amendment offered by Representative Yarmuth to increase the levels of recommended revenue through increasing taxes on in- dividuals earning over $1 million and dedicate all revenue to deficit reduction. The revenue levels would increase in the following amounts: $35 billion for fiscal year 2013, $50 billion for fiscal year 2014, $70 bil- lion for fiscal year 2015, $85 billion for fiscal year 2016, $100 bil- lion for fiscal year 2017, $105 billion for fiscal year 2018, $120 bil- lion for fiscal year 2019, $125 billion for fiscal year 2020, $130 for fiscal year 2021, $140 billion for fiscal year 2022. The amendment was not agreed to by a roll call vote of 15 ayes and 22 noes. ROLLCALL VOTE NO. 6 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) X McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00182 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 175 ROLLCALL VOTE NO. 6—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 7. An amendment offered by Representatives Pascrell, Van Hol- len, Blumenauer, Ryan (OH), and Bonamici increases taxes for U.S. businesses and offers a deduction for companies that insource jobs. The amendment is revenue neutral. The change in recommended levels of revenue are as follows: $0.043 billion for fiscal year 2013, $.020 billion for fiscal year 2014, ¥$0.004 million for fiscal year 2015, ¥$0.017 for fiscal year 2016, ¥$0.012 for fiscal year 2017, ¥$0.027 for fiscal year 2018, $0.025 for fiscal year 2019, ¥$0.045 for fiscal year 2020, ¥$0.013 for fis- cal year 2021, $0.030 for fiscal year 2022. The amendment was not agreed to by a roll call vote of 15 ayes and 21 noes. ROLLCALL VOTE NO. 7 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) X McCLINTOCK (CA) X HONDA (CA) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00183 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 176 ROLLCALL VOTE NO. 7—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 8. An amendment offered by Representative Wasserman Schultz to increase budget authority for Function 550 for the purposes of Medicaid spending, offset by a $700 billion revenue increase from eliminating tax deductions for domestic oil production and U.S. businesses with international operations, changing the depreciation schedules for certain equipment, and raising taxes on individuals with annual income greater than $1,000,000. The budget authority and outlays for Function 550 would in- crease by: $3 billion in fiscal year 2013, $33 billion for fiscal year 2014, $48 billion for fiscal year 2015, $59 billion for fiscal year 2016, $70 billion for fiscal year 2017, $81 billion for fiscal year 2018, $98 billion for fiscal year 2019, $118 billion for fiscal year 2020, $137 billion for fiscal year 2021, $163 billion for fiscal year 2022. The amendment was not agreed to by a roll call vote of 15 ayes and 21 noes. ROLLCALL VOTE NO. 8 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) X McCOLLUM (MN) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00184 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 177 ROLLCALL VOTE NO. 8—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) X McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 9. An amendment offered by Representatives Bass, Van Hollen, Blumenauer, McCollum, Pascrell, Ryan (OH), and Bonamici to in- crease budget authority and outlays for Function 400 related to highway funding offset by a revenue increase from eliminating tax deductions for domestic oil production and U.S. businesses with international operations, changing the depreciation schedules for certain equipment, and raising taxes on individuals with annual in- come greater than $1,000,000. The budget authority for Function 400 would increase by: $32.002 billion for fiscal year 2013, $9.438 billion for fiscal year 2014, $16.716 billion for fiscal year 2015, $15.858 billion for fiscal year 2016, $15.839 billion for fiscal year 2017, $13.939 billion for fiscal year 2018, $14.110 billion for fiscal year 2019, $11.838 billion for fiscal year 2020, $17.798 billion for fiscal year 2021, $6.517 bil- lion for fiscal year 2022. The amendment would increase outlays in the following amounts: $47.185 billion for fiscal year 2013, $15.449 billion for fis- cal year 2014, $21.292 billion for fiscal year 2015, $19.328 billion for fiscal year 2016, $19.638 billion for fiscal year 2017, $18.548 bil- lion for fiscal year 2018, $19.450 billion for fiscal year 2019, $18.178 billion for fiscal year 2020, $25.204 billion for fiscal year 2021, $14.934 billion for fiscal year 2022. The amendment was not agreed to by a roll call vote of 14 ayestjames on DSK6SPTVN1PROD with REPORTS and 18 noes. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00185 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 178 ROLLCALL VOTE NO. 9 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) McCOLLUM (MN) X COLE (OK) YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 10. An amendment offered by Representatives Honda, Van Hol- len, Doggett, McCollum, Yarmuth, Pascrell, Ryan (OH), Moore, Bass, and Bonamici to increase budget authority and outlays in Function 500 for fiscal year 2013 for the purposes of primary and secondary education, offset by a revenue increase from eliminating tax deductions for domestic oil production and U.S. businesses with international operations, changing the depreciation schedules for certain equipment, and raising taxes on individuals with annual in- come greater than $1,000,000. The amendment increases budget authority for Function 500 by $1.872 billion in fiscal year 2013 and outlays in the following amounts: $1.016 billion for fiscal year 2013, $0.550 billion for fiscal year 2014, $0.183 billion for fiscal year 2015, $0.063 billion for fis- cal year 2016, $0.043 billion for fiscal year 2017. The amendment was not agreed to by a roll call vote of 13 ayestjames on DSK6SPTVN1PROD with REPORTS and 21 noes. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00186 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 179 ROLLCALL VOTE NO. 10 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) X McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 11. An amendment offered by Representatives Doggett, Van Hol- len, McCollum, Yarmuth, Pascrell, Honda, Ryan (OH), Moore, Bass, and Bonamici to increase budget authority and outlays in Function 500 for the purposes of college assistance offset by a rev- enue increase from eliminating tax deductions for domestic oil pro- duction and U.S. businesses with international operations, chang- ing the depreciation schedules for certain equipment, and raising taxes on individuals with annual income greater than $1,000,000. The amendment would increase budget authority and outlays for Function 500 by the following amounts: $0 billion for fiscal year 2013, $3.855 billion for fiscal year 2014, $3.477 billion for fiscal year 2015, $3.247 billion for fiscal year 2016, $2.986 billion for fis- cal year 2017, $2.805 billion for fiscal year 2018, $2.786 billion for fiscal year 2019, $2.633 billion for fiscal year 2020, $2.626 billiontjames on DSK6SPTVN1PROD with REPORTS for fiscal year 2021, $2.550 billion for fiscal year 2022. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00187 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 180 The amendment was not agreed to by a roll call vote of 14 ayes and 20 noes. ROLLCALL VOTE NO. 11 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) X LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 12. An amendment offered by Representatives McCollum, Van Hollen, Schwartz, Doggett, Yarmouth, Pascrell, Ryan (OH), Wasserman Schultz, Moore, Bass, and Bonamici expressing a sense of the House relating to women and health care. The amendment was not agreed to by a roll call vote of 14 ayes and 20 noes. ROLLCALL VOTE NO. 12 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00188 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 181 ROLLCALL VOTE NO. 12—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) X AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 13. An amendment offered by Representatives Moore, Van Hol- len, McCollum, Pascrell, Ryan (OH), Bass, and Bonamici to in- crease budget authority and outlays by $136.6 billion for Function 600 for the purpose of a funding increase in the Women Infants and Children Program and Supplemental Nutrition Assistance Pro- gram offset by a revenue increase from eliminating tax deductions for domestic oil production and U.S. businesses with international operations, changing the depreciation schedules for certain equip- ment, and raising taxes on individuals with annual income greater than $1,000,000. The amendment would increase budget authority and outlays for Function 500 by the following amounts: $1.2 billion for fiscal year 2013, $1.2 billion for fiscal year 2014, $1.2 billion for fiscal year 2015, $18.4billion for fiscal year 2016, $18.5billion for fiscal year 2017, $18.8 billion for fiscal year 2018, $19 billion for fiscal year 2019, $19.2 billion for fiscal year 2020, $19.4billion for fiscal yeartjames on DSK6SPTVN1PROD with REPORTS 2021, $19.7billion for fiscal year 2022. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00189 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 182 The amendment was not agreed to by a roll call vote of 13 ayes and 20 noes. ROLLCALL VOTE NO. 13 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 14. An amendment offered by Representatives Ryan (OH), Van Hollen, McCollum, Pascrell, Castor, Bass, and Bonamici to increase spending to fund the Commodity Futures Trading Commission (CFTC) by increasing budget authority in Function 370. The in- creased spending would be paid for by eliminating tax deductions for domestic oil production The amendment would increase revenues by the following amounts: $.599 billion in fiscal year 2013, $1.116 billion in fiscal year 2014, $1.180 billion in fiscal year 2015, $1.251 billion in fiscal year 2016, $1.323 billion in fiscal year 2017, $1.394billion in fiscal year 2018, $1.467 billion in fiscal year 2019, $1.542 billion in fiscal year 2020, $1.621 billion in fiscal year 2021, $1.692 billion in fiscaltjames on DSK6SPTVN1PROD with REPORTS year 2022. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00190 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 183 The amendment would increase budget authority for Function 370 by $0.102 billion in fiscal year 2013, and increases outlays in the following amounts: $0.055 billion in fiscal year 2013, $0.030 bil- lion in fiscal year 2014, $0.010 billion in fiscal year 2015, $0.003 billion in fiscal year 2016, $0.002billion in fiscal year 2017, $0 bil- lion in fiscal year 2018 through fiscal year 2022. The amendment would dedicate the remaining revenues to deficit reduction. The amendment was not agreed to by a roll call vote of 13 ayes and 20 noes. ROLLCALL VOTE NO. 14 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) LANKFORD (OK) X MOORE (WI) X BLACK (TN) X CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 15. An amendment offered by Representatives Bonamici, Van Hollen, Doggett, Pascrell, and Moore expressing a sense of the House supporting the Consumer Financial Protection Bureau andtjames on DSK6SPTVN1PROD with REPORTS the Securities Exchange Commission. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00191 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 184 The amendment was not agreed to by a roll call vote of 13 ayes and 18 noes. ROLLCALL VOTE NO. 15 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) X GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) X DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) LANKFORD (OK) X MOORE (WI) X BLACK (TN) CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) X BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) GUINTA (NH) X WOODALL (GA) X 16. An amendment offered by Representatives Shuler, Van Hol- len, Schwartz, Pascrell, and Bonamici expressing a sense of the House amendment that budget resolutions should enable deficit re- duction through spending reductions and tax reform. The amendment was not agreed to by a roll call vote of 15 ayes and 15 noes. ROLLCALL VOTE NO. 16 Answer Answer Name & State Aye No Name & State Aye No Present Present RYAN (WI) (Chairman) X VAN HOLLEN (MD) (Ranking) Xtjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00192 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  • 185 ROLLCALL VOTE NO. 16—Continued Answer Answer Name & State Aye No Name & State Aye No Present Present GARRETT (NJ) X SCHWARTZ (PA) X SIMPSON (ID) X KAPTUR (OH) X CAMPBELL (CA) DOGGETT (TX) X CALVERT (CA) X BLUMENAUER (OR) AKIN (MO) McCOLLUM (MN) X COLE (OK) X YARMUTH (KY) X PRICE (GA) X PASCRELL (NJ) McCLINTOCK (CA) X HONDA (CA) X CHAFFETZ (UT) RYAN (OH) X STUTZMAN (IN) X WASSERMAN SCHULTZ (FL) LANKFORD (OK) X MOORE (WI) X BLACK (TN) CASTOR (FL) X RIBBLE (WI) X SHULER (NC) X FLORES (TX) X BASS (CA) X MULVANEY (SC) BONAMICI (OR) X HUELSKAMP (KS) X YOUNG (IN) X AMASH (MI) X ROKITA (IN) X GUINTA (NH) X WOODALL (GA) X 17. An amendment offered by Representative Bass, Van Hollen, Pascrell, Ryan (OH), Wasserman Schultz, Moore, Castor, and Bonamici to increase budget authority and outlays for Function 500 for student loans. The amendment would increase budget authority for Function 500 by the following amounts: $4.285 billion for fiscal year 2012, $2.595 billion for fiscal year 2013. The amendment would increase outlays for Function 500 by the following amounts: $2.480 billion for fiscal year 2012, $3.505 billion for fiscal year 2013. The amendment was not agreed to by a roll call vote of 14 ayes and 20 noes. ROLLCALL VOTE NO. 17 Answer Answer Name & State Aye No Name & State Aye No Present Present